GROuP – nOTES TO ThE fInanCIal STaTEmEnTS€¦ · IAS 12 Amendment – Deferred tax: Recovery of...

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1 Accounting policies

Statement of compliance

The consolidated and company financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International Accounting Standards Board (IASB) in the English language, the Financial Reporting Guides as issued by the South African Institute of Chartered Accountants and the South African Companies Act, 2008, as amended.

During the current financial year, the following amendment to IAS12 was adopted:

Standard or Interpretation Title

Effective for annual periods beginning on or after

IAS 12 Amendment – Deferred tax: Recovery of Underlying assets 1 January 2012

The adoption of this amendment did not have any effect on the financial position, results or disclosures by the group.

The following accounting standards, amendments to standards and new interpretations (as at 12 March 2013, the last practicable date), which are not yet mandatory, have not been adopted in the current year:

Standard or Interpretation Title

Effective for annual periods beginning on or after

IFRS 7 Amendment – Disclosures –Offsetting Financial Assets and Financial Liabilities

1 January 2013

IFRS 9 Financial Instruments: Classification and Measurement 1 January 2015

IFRS 10 Consolidated Financial Statements 1 January 2013

IFRS 11 Joint Arrangements 1 January 2013

IFRS 12 Disclosure of Interests in Other Entities 1 January 2013

IFRS 13 Fair Value Measurement 1 January 2013

IFRSs Annual Improvements 2009 – 2011 1 January 2013

IAS 1 Amendment – Presentation of Items of Other Comprehensive Income

1 July 2012

IAS 19 Employee Benefits (revised) 1 January 2013

IAS 27 Separate Financial Statements (Revised 2011) 1 January 2013

IAS 28 Investments in Associates and Joint Ventures (Revised 2011) 1 January 2013

IAS 32 Amendment – Offsetting Financial Assets and Financial Liabilities 1 January 2014

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

The group is in the process of assessing the significance of these new standards, amendments to standards and new interpretations.

The group expects IFRIC 20 to have an impact as a consequence of moving from a life-of-mine strip ratio to a strip ratio applicable to a component of an orebody. IFRIC 20 considers when and how to account separately for the benefits arising from stripping activities, as well as how to measure these benefits both initially and subsequently. The benefits that can accrue to the entity in an open-pit mine include: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods. IFRIC 20 only deals with waste removal costs that are incurred in surface mining activity during the production phase of the mine (‘production stripping costs’) and thus does not have an effect on the accounting for the development of an open-pit mine or on underground activities.

GROuP – nOTES TO ThE fInanCIal STaTEmEnTSFor the year ended 31 December

{ 73FINANCIAL STATEMENTS

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GROuP – nOTES TO ThE fInanCIal STaTEmEnTS continued

For the year ended 31 December

1 Accounting policies (continued)

1.1 Basis of preparation

The financial statements are prepared according to the historical cost convention, except for the revaluation of certain financial instruments to fair value. The group’s accounting policies as set out below are consistent in all material respects with those applied in the previous year, except for the adoption of the new and revised standards and interpretations mentioned above and the change in presentation currency.

Effective 1 January 2012, the group changed the presentation currency of its results from reporting in US dollars and South African rands to reporting only in US dollars. Management has concluded that the change in presentation currency will result in more relevant information than the previous position of reporting in two currencies. Management considered the following factors: the majority of AngloGold Ashanti’s operating mines use US dollars as their functional currency; the majority of AngloGold Ashanti’s annual production and reserves are derived from non-South African rand denominated countries; the majority of AngloGold Ashanti shareholders are not domiciled in a South African rand-denominated country; management prepares investor presentations and analysis in US dollars only; and the management accounts, except for South Africa which is reported in dual currency, are reported to the Chief Operating Decision Maker in US dollars.

The change in presentation currency has no effect on comparative information.

The group financial statements incorporate the financial statements of the company, its subsidiaries and its equity-accounted interests in joint ventures and associates.

The financial statements of all material subsidiaries, the Environmental Rehabilitation Trust Fund and joint ventures, are prepared for the same reporting period as the holding company, using the same accounting policies.

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de- consolidated from the date on which control ceases.

The acquisition of non-controlling interests is reflected as an equity transaction. The entire difference between the cost of the additional interest and the non-controlling interests’ share at the date of acquisition is reflected as a transaction between owners.

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies, including any resulting tax effect are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

1.2 Significant accounting judgements and estimates

Use of estimates

The preparation of the financial statements requires the group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results could differ from those estimates.

The more significant areas requiring the use of management estimates and assumptions relate to Ore Reserve that are the basis of future cash flow estimates and unit-of-production depreciation, depletion and amortisation calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other materials in heap leach pads; asset impairments/reversals (including impairments of goodwill); and write-downs of inventory to net realisable value. Other estimates include post-employment, post-retirement and other employee benefit liabilities and deferred taxation.

2012 annual financial statements74 }

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1.2 Significant accounting judgements and estimates (continued)

Use of estimates (continued)

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

As a global company, the group is exposed to numerous legal risks. The outcome of currently pending and future proceedings cannot be predicted with certainty. Thus, an adverse decision in a lawsuit could result in additional costs that are not covered, either wholly or partly, under insurance policies and that could significantly influence the business and results of operations.

The judgements that management has applied in the application of accounting policies, and the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Carrying value of goodwill and tangible assets

The majority of mining assets are amortised using the units-of-production method where the mine operating plan calls for production from a well-defined proved and probable Ore Reserve.

For mobile and other equipment, the straight-line method is applied over the estimated useful life of the asset which does not exceed the estimated mine life based on proved and probable Ore Reserve as the useful lives of these assets are considered to be limited to the life of the relevant mine.

The calculation of the units-of-production rate of amortisation could be impacted to the extent that actual production in the future is different from current forecast production based on proved and probable Ore Reserve. This would generally arise when there are significant changes in any of the factors or assumptions used in estimating Ore Reserve.

These factors could include:• changes in proved and probable Ore Reserve;• the grade of Ore Reserve may vary significantly from time to time;• differences between actual commodity prices and commodity price assumptions;• unforeseen operational issues at mine sites;• changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates; and• changes in Ore Reserve could similarly impact the useful lives of assets amortised on a straight-line basis, where those lives

are limited to the life of the mine.

The recoverable amounts of cash generating units and individual assets have been determined based on the higher of value in use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the gold price assumption may change which may then impact the estimated life of mine determinant and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The group defers stripping costs incurred during the production stage of its open-pit operations, for those operations, where this is the most appropriate basis for matching the costs against the related economic benefits. This is generally the case where there are fluctuations in stripping costs over the life of the mine.

In the production stage of some open-pit operations, further development of the mine requires a phase of unusually high overburden removal activity that is similar in nature to preproduction mine development. The costs of such unusually high overburden removal activity are deferred and charged against reported profits in subsequent periods on a units-of-production method. This accounting treatment is consistent with that for stripping costs incurred during the development phase of a mine, before production commences.


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Carrying value of goodwill and tangible assets (continued)

If the group were to expense production stage stripping costs as incurred, this would result in volatility in the year to year results from open-pit operations and excess stripping costs would be expensed at an earlier stage of a mine’s operation.

Deferred stripping costs are included in ‘Mine development costs’, within tangible assets. These form part of the total investment in the relevant cash-generating unit, which is reviewed for impairment if events or a change in circumstances indicate that the carrying value may not be recoverable. Amortisation of deferred stripping costs is included in operating costs.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. The cash flows and value in use are significantly affected by a number of factors including published reserves, resources, exploration potential and production estimates, together with economic factors such as spot and future gold prices, discount rates, foreign currency exchange rates, estimates of costs to produce reserves and future capital expenditure.

An individual operating mine is not a typical going-concern business because of the finite life of its reserves. The allocation of goodwill to an individual mine will result in an eventual goodwill impairment due to the wasting nature of the mine reporting unit. In accordance with the provisions of IAS 36 “Impairment of Assets”, the group performs its annual impairment review of assigned goodwill during the fourth quarter of each year.

The carrying amount of goodwill in the consolidated financial statements at 31 December 2012 was $195m (2011: $179m). The carrying amount of tangible assets at 31 December 2012 was $7,648m (2011: $6,525m).

Production start date

The group assesses the stage of each mine construction project to determine when a mine moves into the production stage. The criteria used to assess the start date are determined by the unique nature of each mine construction project and include factors such as the complexity of a plant and its location. The group considers various relevant criteria to assess when the mine is substantially complete and ready for its intended use and moves into the production stage. Some of the criteria would include but are not limited to the following:• the level of capital expenditure compared to the construction cost estimates;• completion of a reasonable period of testing of the mine plant and equipment;• ability to produce gold in saleable form (within specifications and the de minimis rule); and• ability to sustain ongoing production of gold.

When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases and costs are either regarded as inventory or expensed, except for capitalisable costs related to mining asset additions or improvements, underground mine development or Ore Reserve development.

Income taxes

The group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.


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Income taxes (continued)

The group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the group operates could limit the ability of the group to obtain tax deductions in future periods.

Carrying values of the group at 31 December 2012:• deferred tax asset: $96m (2011: $79m);• deferred tax liability: $1,068m (2011: $1,158m);• taxation liability: $117m (2011: $155m); and• taxation asset: $52m (2011: $35m).

Unrecognised value of deferred tax assets: $89m (2011: $51m).

Provision for environmental rehabilitation obligations

The group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The group recognises management’s best estimate for decommissioning and restoration obligations in the period in which they are incurred. Actual costs incurred in future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates, foreign currency exchange rates and discount rates could affect the carrying amount of this provision.

The carrying amount of the rehabilitation obligations for the group at 31 December 2012 was $841m (2011: $747m).

Stockpiles, metals in process and ore on leach pad

Costs that are incurred in or benefit the production process are accumulated as stockpiles, metals in process and ore on leach pads. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product, based on prevailing and long-term metals prices, less estimated costs to complete production and bring the product to sale.

Stockpiles and underground metals in process are measured by estimating the number of tonnes added and removed from the stockpile and from underground, the number of contained gold ounces based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile and underground ore tonnages are verified by periodic surveys.

Estimates of the recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads based on measured tonnes added to the leach pads, the grade of ore placed on the leach pads based on assay data and a recovery percentage based on metallurgical testing and ore type.

Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of gold actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical balancing process is constantly monitored and engineering estimates are refined based on actual results over time.

Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realisable value are accounted for on a prospective basis.


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Stockpiles, metals in process and ore on leach pad (continued)

The carrying amount of inventories (excluding finished goods and mine operating supplies) for the group at 31 December 2012 was $1,383m (2011: $1,060m).

Recoverable tax, rebates, levies and duties

In a number of countries, particularly in Africa, AngloGold Ashanti Limited is due refunds of indirect tax which remain outstanding for periods longer than those provided for in the respective statutes.

In addition, AngloGold Ashanti Limited has unresolved tax disputes in a number of countries, particularly in Continental Africa and in Brazil. If the outstanding input taxes are not received and the tax disputes are not resolved in a manner favourable to AngloGold Ashanti Limited, it could have an adverse effect upon the carrying value of these assets.

The carrying value of recoverable tax, rebates, levies and duties for the group at 31 December 2012 was $241m (2011: $184m).

Pension plans and post-retirement medical obligations

The determination of AngloGold Ashanti Limited’s obligation and expense for pension and provident funds, as well as post- retirement health care liabilities, depends on the selection of certain assumptions used by actuaries to calculate amounts. These assumptions include, among others, the discount rate, the expected long-term rate of return of plan assets, health care inflation costs, rates of increase in compensation costs and the number of employees who reach retirement age before the mine reaches the end of its life. While AngloGold Ashanti Limited believes that these assumptions are appropriate, significant changes in the assumptions may materially affect pension and other post-retirement obligations as well as future expenses, which may result in an impact on earnings in the periods that the changes in these assumptions occur.

The carrying value of the defined benefit plans (including the net asset position disclosed under non-current assets) at 31 December 2012 was $221m (2011: $192m).

Ore Reserve estimates

An Ore Reserve estimate is an estimate of the amount of product that can be economically and legally extracted from the group’s properties. In order to calculate the Ore Reserve, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.

Estimating the quantity and/or grade of the Ore Reserve requires the size, shape and depth of orebodies to be determined by analysing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgements and calculations to interpret the data.

The group is required to determine and report its Ore Reserve in accordance with the SAMREC code.

Because the economic assumptions used to estimate changes in the Ore Reserve from period to period, and because additional geological data is generated during the course of operations, estimates of the Ore Reserve may change from period to period. Changes in the reported Ore Reserve may affect the group’s financial results and financial position in a number of ways, including the following:• asset carrying values may be affected due to changes in estimated future cash flows;• depreciation, depletion and amortisation charged in the income statement may change where such charges are determined

by the units-of-production basis, or where the useful economic lives of assets change;• overburden removal costs recorded on the statement of financial position or charged in the income statement may change

due to changes in stripping ratios or the units-of-production basis of depreciation;• decommissioning site restoration and environmental provisions may change where changes in the estimated Ore Reserve

affect expectations about the timing or cost of these activities; and• the carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.


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Exploration and evaluation expenditure

The group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the income statement.

The carrying value of capitalised exploration assets at 31 December 2012 was $4m (2011: $2m).

Development expenditure

Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project has reached a stage at which economically recoverable reserves exist such that development may be sanctioned. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having started the development activity, a judgement is made that a development asset is impaired, the appropriate amount will be written off to the income statement.

Share-based payments

The group issues equity-settled share-based payments to certain employees and third parties outside the group. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed as services are rendered over the vesting period, based on the group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Fair value is measured using the Black-Scholes option-pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The income statement charge for the year was $66m (2011: $61m).

Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.

In determining the threshold for disclosure on a qualitative and quantitative basis, management considers the potential for a disruptive effect on the normal functioning of the group and/or whether the contingency could impact investment decisions. Such qualitative matters considered are reputational risks, regulatory compliance issues and reasonable investor considerations. For quantitative purposes an amount of $20m, has been considered.

Litigation and other judicial proceedings as a rule raise difficult and complex legal issues and are subject to uncertainties and complexities including, but not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction in which each suit is brought and differences in applicable law. Upon resolution of any pending legal matter, the group may be forced to incur charges in excess of the presently established provisions and related insurance coverage. It is possible that the financial position, results of operations or cash flows of the group could be materially affected by the unfavourable outcome of litigation.


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1.3 Summary of significant accounting policies

Equity-accounted investments

Joint ventures

A joint venture is an entity in which the group holds a long-term interest and which the group and one or more other venturers jointly control under a contractual arrangement, that provides for strategic, financial and operating policy decisions relating to the activities requiring unanimous consent of the parties sharing control. The group’s interests in jointly controlled entities are accounted for using the equity method.

Profits and losses realised in connection with transactions between the group and jointly controlled entities are eliminated in proportion to share ownership. Such profits and losses are deducted from the group’s equity and related statement of financial position amount and released in the group accounts when the assets are effectively realised outside the group. Dividends received from equity accounted joint ventures are included in operating activities in the cash flow statement.

Joint ventures are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

Associates

The equity method of accounting is used for an investment over which the group exercises significant influence and normally owns between 20% and 50% of the voting equity. Associates are equity-accounted from the effective date of acquisition to the effective date of disposal. If necessary, impairment losses on the equity value are reported under share of profit and loss from investments accounted for using the equity method.

Profits and losses realised in connection with transactions between the group and associated companies are eliminated in proportion to share ownership. Such profits and losses are deducted from the group’s equity and related statement of financial position amount and released in the group accounts when the assets are effectively realised outside the group. Dividends received from associates are included in investing activities in the cash flow statement.

As the group only has significant influence, it is unable to obtain reliable information at reporting period on a timely basis. The results of associates are equity-accounted from their most recent audited annual financial statements or unaudited interim financial statements, all within three months of the year end of the group. Adjustments are made to the associates’ financial results for material transactions and events in the intervening period.

Associates are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

Joint ventures and associates

Any losses of equity-accounted investments are brought to account in the consolidated financial statements until the investment in such investments is written down to zero. Thereafter, losses are accounted for only insofar as the group is committed to providing financial support to such investees.

The carrying value of equity-accounted investments represents the cost of each investment, including goodwill, balance outstanding on loans advanced if the loan forms part of the net investment in the investee, any impairment losses recognised, the share of post-acquisition retained earnings and losses, and any other movements in reserves. The carrying value of equity- accounted investments is reviewed when indicators arise and if any impairment in value has occurred; it is recognised in the period in which the impairment arose.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. Acquisition-related costs are expensed as incurred and included in administrative expenses. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss.


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1.3 Summary of significant accounting policies (continued)

Unincorporated joint ventures

An unincorporated joint venture involves the use of assets and other resources of the group and other venturers rather than the establishment of a corporation, partnership or other entity. The group accounts for the assets it controls and the liabilities it incurs, the expenses it incurs and the income from the sale or use of its share of the joint venture‘s output.

Foreign currency translation

Functional currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’).

Transactions and balances

Foreign currency transactions are translated into the functional currency using the approximate exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at the reporting period exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except for hedging derivative balances that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement”. Translation differences on these balances are reported as part of their fair value gain or loss.

Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in other comprehensive income within equity.

Group companies

The results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:• share capital and premium are translated at historical rates of exchange at the reporting date;• retained earnings are converted at historical average exchange rates;• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that

statement of financial position;• income and expenses for each income statement presented are translated at monthly average exchange rates (unless this

average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates prevailing at the date of the transaction);

• all resulting exchange differences are recognised in other comprehensive income and presented as a separate component of equity (foreign currency translation); and

• other reserves, other than those translated above, are converted at the closing rate at each reporting date. These resulting exchange differences are recognised in retained earnings.

Exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income on consolidation. For the company, the exchange differences on such monetary items are reported in the company income statement.

When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Segment reporting

An operating segment is a business activity whose results are regularly reviewed by the chief operating decision maker in order to make decisions about resources to be allocated to it and to assess its performance and for which discrete financial information is available. The chief operating decision maker has been determined to be the Executive Committee.


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Tangible assets

Tangible assets are recorded at cost less accumulated amortisation and impairments/reversals. Cost includes pre-production expenditure incurred during the development of a mine and the present value of related future decommissioning costs.

Interest on borrowings relating to the financing of major capital projects under construction is capitalised during the construction phase as part of the cost of the project. Such borrowing costs are capitalised over the period during which the asset is being acquired or constructed and borrowings have been incurred. Capitalisation ceases when construction is interrupted for an extended period or when the asset is substantially complete. Other borrowing costs are expensed as incurred.

If there is an indication that the recoverable amount of any of the tangible assets is less than the carrying value, the recoverable amount is estimated and an allowance is made for the impairment in value.

Subsequent costs are included in the asset’s carrying amount only when it is probable that future economic benefits associated with the asset will flow to the group, and the cost of the addition can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

To the extent a legal or constructive obligation to a third party exists, the acquisition cost includes estimated costs of dismantling and removing the asset and restoring the site. A change in estimated expenditures for dismantling, removal and restoration is added to and/or deducted from the carrying value of the related asset. To the extent that the change would result in a negative carrying amount, this effect is recognised as income. The change in depreciation charge is recognised prospectively.

For assets amortised on the units-of-production method, amortisation is calculated to allocate the cost of each asset to its residual value over its estimated useful life.

For those assets not amortised on the units-of-production method, amortisation is calculated over their estimated useful life as follows:• buildings up to life of mine;• plant and machinery up to life of mine;• equipment and motor vehicles up to five years;• computer equipment up to three years; and• leased assets over the shorter of the period of the lease and the useful life.

Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever is sooner.

Assets are amortised to residual values. Residual values and useful lives are reviewed, and adjusted if appropriate, at the beginning of each financial year.

Gains and losses on disposals are determined by comparing net sale proceeds with the carrying amount. These are included in the income statement.

Mine development costs

Capitalised mine development costs include expenditure incurred to develop new orebodies, to define further mineralisation in existing orebodies and, to expand the capacity of a mine. Mine development costs include acquired proved and probable Ore Reserve at cost at the acquisition date. These costs are amortised from the date on which commercial production begins.

Depreciation, depletion and amortisation of mine development costs are computed by the units-of-production method based on estimated proved and probable Ore Reserve. The proved and probable Ore Reserve reflects estimated quantities of reserves which can be recovered economically in the future from known mineral deposits.


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Tangible assets (continued)

Mine development costs (continued)

Stripping costs incurred in open-pit operations during the production phase to remove additional waste are charged to operating costs on the basis of the average life of mine stripping ratio and the average life of mine costs per tonne. The average stripping ratio is calculated as the number of tonnes of waste material expected to be removed during the life of mine per tonne of ore mined. The average life of mine cost per tonne is calculated as the total expected costs to be incurred to mine the orebody, divided by the number of tonnes expected to be mined. The average life of mine stripping ratio and the average life of mine cost per tonne are recalculated annually in the light of additional knowledge and changes in estimates.

The cost of the excess stripping is capitalised as mine development costs when the actual mining costs exceed the sum of the adjusted tonnes mined, being the actual ore tonnes plus the product of the actual ore tonnes multiplied by the average life of mine stripping ratio, multiplied by the life of mine cost per tonne. When the actual mining costs are below the sum of the adjusted tonnes mined, being the actual ore tonnes plus the product of the actual ore tonne multiplied by the average life of mine stripping ratio, multiplied by the life of mine cost per tonnes, previously capitalised costs are expensed to increase the cost up to the average.

The cost of stripping in any period will reflect the average stripping rates for the orebody as a whole.

Mine infrastructure

Mine plant facilities, including decommissioning assets, are amortised using the lesser of their useful life or units-of-production method based on estimated proved and probable Ore Reserve. Other tangible assets comprising vehicles and computer equipment are depreciated by the straight-line method over their estimated useful lives.

Land and assets under construction

Land and assets under construction are not depreciated and are measured at historical cost less impairments.

Mineral rights and dumps

Mineral rights are amortised using the units-of-production method based on the estimated proved and probable Ore Reserve. Dumps are amortised over the period of treatment.

Exploration and evaluation assets

All exploration costs are expensed until the directors conclude that a future economic benefit will more likely than not be realised. In evaluating if expenditures meet this criterion to be capitalised, the directors use several different sources of information depending on the level of exploration. While the criterion for concluding that expenditure should be capitalised is always probable, the information that the directors use to make that determination depends on the level of exploration.

• Costs on greenfields sites, being those where the group does not have any mineral deposits which are already being mined or developed, are expensed as incurred until the directors are able to demonstrate that future economic benefits are probable, which generally will be the establishment of proved and probable reserves at this location.

• Costs on brownfields sites, being those adjacent to mineral deposits which are already being mined or developed, are expensed as incurred until the directors are able to demonstrate that future economic benefits are probable, which generally will be the establishment of increased proved and probable reserves after which the expenditure is capitalised as a mine development cost.

• Costs relating to extensions of mineral deposits, which are already being mined or developed, including expenditure on the definition of mineralisation of such mineral deposits, are capitalised as a mine development cost.

Costs relating to property acquisitions are capitalised within development costs.


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Intangible assets

Acquisition and goodwill arising thereon

Where an investment in a subsidiary, joint venture or an associate is made, any excess of the consideration transferred over the fair value of the attributable Mineral Resource including value beyond proved and probable, exploration properties and net assets is recognised as goodwill. Goodwill in respect of subsidiaries is disclosed as goodwill. Goodwill relating to equity- accounted joint ventures and associates is included within the carrying value of the investment which is tested for impairment when indicators exist.

Goodwill relating to subsidiaries is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

Royalty rate concession

Royalty rate concession with the government of Ghana was capitalised at fair value at agreement date. Fair value represents a present value of future royalty rate concessions over 15 years. The royalty rate concession has been assessed to have a finite life and is amortised on a straight-line method over a period of 15 years, the period over which the concession runs. The related amortisation expense is charged through the income statement. This intangible asset is tested for impairment when there is an indicator of impairment.

Software

Software purchased, including direct costs associated with customisation and installation of the software, is capitalised.

Internally-developed software is capitalised when it meets the criteria for capitalisation. Other software development expenditure is charged to the income statement when incurred. Software is amortised on a straight-line basis over its useful life which is determined to be the lesser of the licence period of the software; the manufacturer’s announced upgrade that management intends to implement; or 3 years. Useful lives are reviewed, and adjusted if appropriate, at the beginning of each financial year.

Impairment of assets

Intangible assets that have an indefinite useful life and separately recognised goodwill are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

Impairment calculation assumptions include life of mine plans based on prospective reserves and resources, management’s estimate of the future gold price, based on current market price trends, foreign exchange rates, and a pre-tax discount rate adjusted for country and project risk. It is therefore reasonably possible that changes could occur which may affect the recoverability of tangible and intangible assets.

Leased assets

Assets subject to finance leases are capitalised at the lower of their fair value or the present value of minimum lease payments measured at inception of the lease with the related lease obligation recognised at the same amount. Capitalised leased assets are depreciated over the shorter of their estimated useful lives and the lease term. Finance lease payments are allocated using the rate implicit in the lease, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor.

Operating lease rentals are charged against operating profits in a systematic manner related to the period the assets concerned will be used.


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Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as having been met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Exploration and research expenditure

Pre-licence costs are recognised in profit or loss as incurred. Exploration and research expenditure is expensed in the year in which it is incurred. These expenses include: geological and geographical costs, labour, Mineral Resource and exploratory drilling costs.

Inventories

Inventories are valued at the lower of cost and net realisable value after appropriate allowances for redundant and slow moving items. Cost is determined on the following bases:• metals in process are valued at the average total production cost at the relevant stage of production;• gold doré/bullion is valued on an average total production cost method;• ore stockpiles are valued at the average moving cost of mining and stockpiling the ore. Stockpiles are classified as a

non-current asset where the stockpile exceeds current processing capacity;• by-products, which include uranium oxide and sulphuric acid, are valued using an average total production cost method.

By-products are classified as a non-current asset where the by-products on hand exceed current processing capacity;• mine operating supplies are valued at average cost; and• heap leach pad materials are measured on an average total production cost basis. The cost of materials on the leach pad

from which metals are expected to be recovered in a period longer than 12 months is classified as a non-current asset.

A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory.

Provisions

Provisions are recognised when the group has a present obligation, whether legal or constructive, because of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised only when the reimbursement is virtually certain. The amount to be reimbursed is recognised as a separate asset. Where the group has a joint and several liability with one or more other parties, no provision is recognised to the extent that those other parties are expected to settle part or all of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Litigation and administrative proceedings are evaluated on a case-by-case basis considering the information available, including that of legal counsel, to assess potential outcomes. Where it is considered probable that an obligation will result in an outflow of resources, a provision is recorded for the present value of the expected cash outflows if these are reasonably measurable. These provisions cover the estimated payments to plaintiffs, court fees and the cost of potential settlements.

AngloGold Ashanti Limited does not recognise a contingent liability on its statement of financial position except in a business combination where the contingent liability represents a possible obligation. A contingent liability is disclosed when the possibility of an outflow of resources embodying economic benefits is not remote.


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Borrowed commodities

When commodities are borrowed to meet contractual commitments, the fair value at inception is charged to the income statement as cost of sales, and it is reflected as a liability on the statement of financial position. The liability is subsequently measured at fair value with changes in fair value recorded through the income statement until settlement occurs.

Employee benefits

Pension obligations

Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The group has both defined benefit and defined contribution plans. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

A defined contribution plan is a pension scheme under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in current and prior periods. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future contribution payments is available.

The asset/liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The value of any defined benefit asset recognised is restricted to the sum of any past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are immediately recorded in other comprehensive income.

Other post-employment benefit obligations

Some group companies provide post-retirement health care benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology on the same basis as that used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in other comprehensive income immediately. These obligations are valued annually by independent qualified actuaries.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after reporting date are discounted to present value.

Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the group’s shareholders after certain adjustments. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.


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Employee benefits (continued)

Share-based payments

The group’s management awards certain employees bonuses in the form of equity-settled share-based payments on a discretionary basis.

The fair value of the equity instruments granted is calculated at measurement date, for transactions with employees this is at grant date. For transactions with employees, fair value is based on market prices of the equity instruments granted, if available, taking into account the terms and conditions upon which those equity instruments were granted. If market prices of the equity instruments granted are not available, the fair value of the equity instruments granted is estimated using an appropriate valuation model. Vesting conditions, other than market conditions, are not taken into account when estimating the fair value of shares or share options at measurement date.

Over the vesting period, the fair value at measurement date is recognised as an employee benefit expense with a corresponding increase in other capital reserves based on the group’s estimate of the number of instruments that will eventually vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. Vesting assumptions for non-market conditions are reviewed at each reporting date to ensure they reflect current expectations.

When options are exercised or share awards vest, the proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium.

Where the terms of an equity settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of the modification.

In the company financial statements, share-based payment arrangements with employees of other group entities are recognised by charging that entity its share of the expense and a corresponding increase in other capital reserves.

Environmental expenditure

The group has long-term remediation obligations comprising decommissioning and restoration liabilities relating to its past operations which are based on the group’s environmental management plans, in compliance with current environmental and regulatory requirements. Provisions for non-recurring remediation costs are made when there is a present obligation, it is probable that expenditure on remediation work will be required and the cost can be estimated within a reasonable range of possible outcomes. The costs are based on currently available facts, technology expected to be available at the time of the clean up, laws and regulations presently or virtually certain to be enacted and prior experience in remediation of contaminated sites.

Contributions for the South African operations are made to Environmental Rehabilitation Trust Funds, created in accordance with local statutory requirements where applicable, to fund the estimated cost of rehabilitation during and at the end of the life of a mine. The amounts contributed to the trust funds are accounted for as non-current assets in the company. Interest earned on monies paid to rehabilitation trust funds is accrued on a time proportion basis and is recorded as interest income. For group purposes, the trusts are consolidated.

Decommissioning costs

The provision for decommissioning represents the cost that will arise from rectifying damage caused before production commences. Accordingly, a provision is recognised and a decommissioning asset is recognised and included within mine infrastructure.


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Environmental expenditure (continued)

Decommissioning costs (continued)

Decommissioning costs are provided at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices. The unwinding of the decommissioning obligation is included in the income statement. Estimated future costs of decommissioning obligations are reviewed regularly and adjusted as appropriate for new circumstances or changes in law or technology. Changes in estimates are capitalised or reversed against the relevant asset. Estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.

Gains or losses from the expected disposal of assets are not taken into account when determining the provision.

Restoration costs

The provision for restoration represents the cost of restoring site damage after the start of production. Changes in the provision are recorded in the income statement as a cost of production.

Restoration costs are estimated at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices and adjusted for risks specific to the liability. The estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.

Revenue recognition

Revenue is recognised at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits will flow to the group and revenue and costs can be reliably measured. The following criteria must also be present:• the sale of mining products is recognised when the significant risks and rewards of ownership of the products are transferred

to the buyer;• dividends and royalties are recognised when the right to receive payment is established;• interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the

period to maturity, when it is determined that such income will accrue to the group; and• where a by-product is not regarded as significant, revenue is credited against cost of sales, when the significant risks and

rewards of ownership of the products are transferred to the buyer.

Taxation

Deferred taxation is provided on all qualifying temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are only recognised to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future and future taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date.

Deferred tax assets and liabilities are measured at future anticipated tax rates, which have been enacted or substantively enacted at the reporting date.

Current and deferred tax is recognised as income or expense and included in profit or loss for the period, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different period in other comprehensive income or directly in equity, or a business combination that is an acquisition.

Current tax is measured on taxable income at the applicable statutory rate enacted or substantively enacted at the reporting date.

Special items

Items of income and expense that are material and require separate disclosure, in accordance with IAS 1.97, are classified as special items on the face of the income statement. Special items that relate to the underlying performance of the business are classified as operating special items and include impairment charges and reversals. Special items that do not relate to underlying business performance are classified as non-operating special items and are presented below operating profit (loss) on the income statement.


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Dividend distribution

Dividend distribution to the group’s shareholders is recognised as a liability in the group’s financial statements in the period in which the dividends are declared by the board of directors of AngloGold Ashanti Limited.

Financial instruments

Financial instruments are initially measured at fair value when the group becomes a party to their contractual arrangements. Transaction costs are included in the initial measurement of financial instruments, except financial instruments classified as at fair value through profit or loss. The subsequent measurement of financial instruments is dealt with below.

A financial asset is derecognised when the right to receive cash flows from the asset has expired or the group has transferred its rights to receive cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

On derecognition of a financial asset, the difference between the proceeds received or receivable and the carrying amount of the asset is included in profit or loss.

On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to another party and the amount paid is included in profit or loss.

Regular way purchases and sales of all financial assets and liabilities are accounted for at settlement date.

Derivatives and hedge accounting

The group enters into derivatives to ensure a degree of price certainty and to guarantee a minimum revenue on a portion of future planned gold production. In addition, the group enters into derivatives to manage interest rate and currency risk.

The method of recognising fair value gains and losses depends on whether derivatives are classified as held for trading or are designated as hedging instruments, and if the latter, the nature of the risks being hedged. The group designates derivatives as either, hedges of the variability in highly probable future cash flows attributable to a recognised asset or liability, or a forecast transaction (cash flow hedges), or hedges of the fair value of recognised asset or liability or a firm commitment (fair value hedges).

For cash flow hedges, the effective portions of fair value gains or losses are recognised in other comprehensive income until the hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting or when the hedge transactions affect earnings. Any cumulative gain or loss existing in equity at that time remains in equity until the forecast transaction is recognised in the income statement. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or liability, the associated cumulative gains and losses that were recognised directly in other comprehensive income are reclassified into earnings in the same periods during which the asset acquired or the liability assumed affects earnings for the period.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the income statement. The ineffective portion of fair value gains and losses is reported in earnings in the period to which they relate. For fair value hedges, the gain or loss from changes in fair value of the hedged item is reported in earnings, together with the offsetting gains and losses from changes in fair value of the hedging instrument.

All other derivatives are classified as held for trading and are subsequently measured at their estimated fair value, with the changes in estimated fair value in the statement of financial position as either a derivative asset or derivative liability, including translation differences, at each reporting date being reported in earnings in the period to which it relates. Fair value gains and losses on these derivatives are included in gross profit in the income statement.


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Financial instruments (continued)

Derivatives and hedge accounting (continued)

Commodity-based (normal purchase or normal sale) derivative contracts that meet the requirements of IAS 39 are recognised in earnings when they are settled by physical delivery.

Hedge accounting is applied to derivatives designated as hedging instruments in a cash flow hedge provided certain criteria in IAS 39 are met. At the inception of a hedging relationship, the relationship between the hedging instruments and the hedged items, its risk management objective and its strategy for undertaking the hedge, is documented. A documented assessment, both at hedge inception and on an ongoing basis, of whether or not the hedging instruments, primarily derivatives, that are used in hedging transactions are highly effective in offsetting the changes attributable to the hedged risks in the cash flows of the hedged items, is also prepared.

Hedge ineffectiveness is recognised in the income statement in “Loss on non-hedge derivatives and other commodity contracts”.

The estimated fair values of derivatives are determined at discrete points in time based on the relevant market information. These estimates are calculated with reference to the market rates using industry standard valuation techniques.

Other investments

Listed equity investments and unlisted equity investments, other than investments in subsidiaries, joint ventures, and associates, are classified as available-for-sale financial assets and subsequently measured at fair value. Listed investments’ fair values are calculated by reference to the quoted selling price at the close of business on the reporting date. Fair values for unlisted equity investments are estimated using methods reflecting the economic circumstances of the investee. Equity investments for which fair value cannot be measured reliably are recognised at cost less impairment. Changes in fair value are recognised in other comprehensive income in the period in which they arise. These amounts are removed from equity and reported in income when the asset is derecognised or when there is evidence that the asset is impaired.

Investments which management has the intention and ability to hold to maturity are classified as held-to-maturity financial assets and are subsequently measured at amortised cost using the effective interest rate method. If there is evidence that held- to-maturity financial assets are impaired, the carrying amount of the assets is reduced and the loss recognised in the income statement.

Other non-current assets

• Loans and receivables are subsequently measured at amortised cost using the effective interest rate method. If there is evidence that loans and receivables are impaired, the carrying amount of the assets is reduced and the loss recognised in the income statement.

• Post-retirement assets are measured according to the employee benefits policy.

Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less accumulated impairment. Impairment of trade and other receivables is established when there is objective evidence as a result of a loss event that the group will not be able to collect all amounts due according to the original terms of the receivables. Objective evidence includes failure by the counterparty to perform in terms of contractual arrangements and agreed terms. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Impairments relate to specific accounts whereby the carrying amount is directly reduced. The impairment is recognised in the income statement.


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Financial instruments (continued)

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments which are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. They are measured at amortised cost which is deemed to be fair value as they have a short-term maturity.

Cash restricted for use

Cash which is subject to legal or contractual restrictions on use is classified separately as cash restricted for use.

Financial liabilities

Financial liabilities, other than derivatives and liabilities classified as at fair value through profit or loss, are subsequently measured at amortised cost, using the effective interest rate method.

Financial liabilities permitted to be designated on initial recognition as being at fair value through profit or loss are recognised at fair value, with transaction costs being recognised in profit or loss, and are subsequently measured at fair value. Gains and losses on financial liabilities that are designated as at fair value through profit or loss are recognised in profit or loss as they arise. Fair value of a financial liability that is quoted in an active market is the current offer price times the number of units of the instrument held or issued.

Financial guarantee contracts are accounted for as financial instruments and measured initially at estimated fair value. They are subsequently measured at the higher of the amount determined in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, and the amount initially recognised less (when appropriate) cumulative amortisation recognised in accordance with IAS 18 “Revenue”.

Convertible bonds

Convertible bonds, except equity components, are accounted for as liabilities. Option components are treated as derivative liabilities and carried at fair value, with changes in fair value recorded in the income statement as a separate instrument and reported separately except where the host contract is carried at fair value. The bond component is carried at amortised cost using the effective interest rate. Where the fair value option is elected, the bonds are carried at fair value with changes in fair value recorded in the income statement.

Treasury shares

The group’s own equity instruments, which are reacquired or held by subsidiary companies (treasury shares), are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the group’s own equity instruments.

Accounting for black economic empowerment (BEE) transactions

Where equity instruments are issued to a BEE party at less than fair value, these are accounted for as share-based payments.

Any difference between the fair value of the equity instrument issued and the consideration received is accounted for as an expense in the income statement.

A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting condition, but is factored into the fair value determination of the instrument.


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2 Segmental information AngloGold Ashanti Limited’s operating segments are being reported based on the financial information provided to the chief executive officer and the executive committee, collectively identified as the chief operating decision maker (CODM). Individual members of the executive committee are responsible for geographic regions of the business.

Group analysis by origin is as follows:

Net operating assets Total assets

Figures in million (US dollars) 2012 2011 2012 2011

South Africa (1) 2,619 1,834 3,082 2,148

Continental Africa (3) 3,146 3,129 4,818 4,288

Australasia (1) 684 339 1,045 736

Americas (1) 2,300 2,068 2,863 2,501

Other, including non-gold producing subsidiaries (2) 60 60 887 1,129

8,809 7,430 12,695 10,802

Non-current assets by foreign countries have not been disclosed as it is impracticable.

Amortisation Capital expenditure

Figures in million (US dollars) 2012 2011 2012 2011

South Africa 302 338 583 532

Continental Africa (3) 248 219 790 420

Australasia 36 42 355 102

Americas 213 169 390 456

Other, including non-gold producing subsidiaries 9 11 36 17

808 779 2,154 1,527

Equity-accounted investments included above (10) (9) (303) (88)

798 770 1,851 1,439

Gold production (attributable) (000oz)

2012 2011

South Africa 1,212 1,624

Continental Africa 1,521 1,570

Australasia 258 246

Americas 953 891

3,944 4,331

(1) Total assets includes allocated goodwill of $13m (2011: nil) for South Africa, $159m (2011: $156m) for Australasia and $23m (2011: $23m) for Americas (note 16).

(2) During 2011, total assets included assets held for sale in respect of the AGA-Polymetal Strategic Alliance consisting of AGA-Polymetal Strategic Alliance Management Company Holdings Limited, Amikan Holding Limited, AS APK Holdings Limited, Imitzoloto Holdings Limited and Yeniseiskaya Holdings Limited of $20m and properties held for sale by Rand Refinery of $1m (note 24).

(3) Includes equity-accounted joint ventures.


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Gold income

Figures in million (US dollars) 2012 2011

2 Segmental information (continued)

Geographical analysis of gold income by origin is as follows:


Continental Africa 2,609 2,530

Australasia 426 385

Americas 1,656 1,487

6,704 6,962

Equity-accounted investments included above (351) (392)

(note 3) 6,353 6,570

Foreign countries included in the above and considered material are:

Brazil 851 767

Ghana 772 802

Tanzania 906 754

Geographical analysis of gold income by destination is as follows:


North America 1,197 1,022

Australia 426 378

Asia 387 478

Europe 404 630

United Kingdom 690 1,834

6,704 6,962


(note 3) 6,353 6,570

Gross profit (loss) (4)


South Africa 651 1,083

Continental Africa 882 938

Australasia 78 (13)

Americas 722 744

Corporate and other 41 28

2,374 2,780


2,256 2,623

(4) The group’s segment profit measure is gross profit, which excludes the results of equity-accounted investments. For reconciliation of gross profit to profit before taxation, refer to the consolidated income statement.


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3 RevenueRevenue consists of the following principal categories:

Gold income (note 2) 6,353 6,570

By-products (note 4) 206 224

Dividends received 7 –

Royalties received (note 6) 23 79

Interest received (note 32) 43 52

– loans and receivables (1) 13 14

– available-for-sale and held-to-maturity investments 5 7

– cash and cash equivalents 25 31

6,632 6,925

(1) Interest received from loans and receivables comprises:

– related parties 1 –

– unwinding of long-term receivables 4 12

– other loans 8 2

13 14

4 Cost of salesCash operating costs (1) 3,307 3,029

Insurance reimbursement (30) –

By-products revenue (note 3) (206) (224)

3,071 2,805

Royalties 164 193

Other cash costs 35 30

Total cash costs 3,270 3,028

Retrenchment costs (note 10) 10 15

Rehabilitation and other non-cash costs 67 229

Production costs 3,347 3,272

Amortisation of tangible assets (notes 9, 15 and 32) 793 768

Amortisation of intangible assets (notes 16 and 32) 5 2

Total production costs 4,145 4,042

Inventory change (83) (96)

4,062 3,946

(1) Cash operating costs comprise:

– salaries and wages 1,186 1,104

– stores and other consumables 746 684

– fuel, power and water 670 598

– contractors 560 499

– services and other charges 145 144

3,307 3,029


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5 Other operating expensesPension and medical defined benefit provisions 31 6

Claims filed by former employees in respect of loss of employment, work-related accident injuries and diseases, governmental fiscal claims and care and maintenance of old tailings operations 10 21

41 27

6 Special itemsNet impairment (reversal) and derecognition of tangible assets (notes 13 and 15) 356 (120)

Impairment reversal of intangible assets (notes 13 and 16) (10) –

Impairments of other investments (notes 13 and 18) 16 21

Impairment (reversal) of other receivables 1 (1)

Net loss on disposal and derecognition of land, mineral rights, tangible assets and exploration properties (notes 13 and 15) 15 8

Profit on disposal of subsidiary ISS International Limited (note 13) – (2)

Profit on partial disposal of Rand Refinery Limited (note 13) (14) –

Black economic empowerment transaction modification costs for Izingwe (Pty) Limited (Izingwe) (note 11) – 7

Royalties received (note 3) (1) (23) (79)

Insurance claim recovery on capital items (note 13) – (3)

Contract termination and settlement costs (2) 21 –

Indirect tax expenses and legal claims (3) 40 6

402 (163)

(1) Includes the Boddington royalty of $18m (2011: $38m) and other royalties of $5m (2011: $6m). In 2011, royalties received included the sale of Ayanfuri royalty to Franco Nevada Corporation for a pre-taxation amount of $35m.

(2) Comprises the Mining & Building Contractors Limited (MBC) termination costs of $17m at Obuasi as well as contract settlement costs of $4m at Siguiri.

(3) Indirect tax expenses and legal claims include the following: – net impairment for non-recovery of VAT and fuel duties in Argentina, Colombia, Guinea and Namibia of $29m (2011: $1m);

and – the Westchester/Africore Limited legal claim in Ghana of $11m (2011: $5m).


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7 Finance costs and unwinding of obligationsFinance costs

Finance costs on rated bonds and corporate notes (1) 74 56

Finance costs on convertible bonds (1) 27 25

Finance costs on bank loans and overdrafts (1) 18 10

Finance costs on mandatory convertible bonds (1) 37 38

Amortisation of fees 15 7

Finance lease charges 6 5

Other finance costs 2 3

179 144

Amounts capitalised (note 15) (12) (3)

Total finance costs 167 141

Unwinding of obligations, accretion of convertible bonds and other discounts

Unwinding of decommissioning obligation (note 27) 11 12

Unwinding of restoration obligation (note 27) 17 15

Unwinding of other provisions (note 27) 1 –

Accretion of convertible bonds discount (1) 30 28

Discounting of long-term trade and other receivables 5 –

Total unwinding of obligations, accretion of convertible bonds and other discounts 64 55

Total finance costs, unwinding of obligations, accretion of convertible bonds and other discounts (note 32) 231 196

(1) Finance costs and accretion of convertible bonds discount have been determined using the effective interest rate method.

8 Share of equity-accounted investments’ (loss) profit Revenue 380 406

Operating and other expenses (323) (284)

Special items (1) 4 –

Net interest received (paid) 2 (1)

Profit before taxation 63 121

Taxation (32) (52)

Profit after taxation 31 69

Impairment of investments in associates (notes 13 and 17) (20) (5)

Impairment of investment in joint ventures (notes 13 and 17) (39) (11)

Loss on disposal of loan to joint venture (notes 13 and 17) (2) –

Reversal of impairment in associate (notes 13 and 17) 2 –

Reversal of impairment in joint venture (notes 13,17 and 24) – 20

(note 32) (28) 73

(1) Special items include a $4m settlement received following a rate dispute with a contractor at the Yatela mine; profit on disposal of AGA-Polymetal Strategic Alliance of $3m and an impairment of tangible assets at Yatela of $3m.


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9 Profit before taxationProfit before taxation is arrived at after taking account of:

Auditors’ remuneration

– audit fees 7 8

– other audit-related fees (1) 4 7

11 15

Amortisation of tangible assets

– owned assets 774 759

– leased assets 19 9

(notes 4, 15 and 32) 793 768

Operating lease charges 42 29

(1) Other audit-related fees consist of fees charged for assurance and related services and include consultations concerning financial accounting and reporting standards, comfort letters and consents.

10 Employee benefitsEmployee benefits including executive directors’ and prescribed officers’ salaries and other benefits 1,298 1,232

Health care and medical scheme costs

– current medical expenses 77 78

– defined benefit post-retirement medical expenses 36 14

Pension and provident plan costs

– defined contribution 69 64

– defined benefit pension plans 3 2

Retrenchment costs (note 4) 10 15

Share-based payment expense (note 11) 66 54

Included in cost of sales, other operating expenses, special items and corporate administration, marketing and other expenses 1,559 1,459

Actuarial defined benefit plan expense analysis

Defined benefit post-retirement medical

– current service cost 1 1

– interest cost 13 14

– expected return on plan assets – (1)

– recognised past service cost 22 –

36 14

Defined benefit pension plans

– current service cost 7 7

– interest cost 27 25

– expected return on plan assets (31) (30)

3 2

Actual return on plan assets

– defined benefit pension and medical plans 45 23

Refer to the Remuneration report for details of directors’ and prescribed officers’ emoluments.


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11 Share-based payments

Share incentive schemes

No new share incentive schemes were approved by the shareholders of AngloGold Ashanti Limited during the current financial year. New awards were made under the existing BSP and LTIP plans. Additional ESOP awards were granted in terms of the April 2011 modification. The total cost relating to employee share incentive schemes was $66m (2011: $54m) and is made up as follows:

Employee Share Ownership Plan (ESOP) – Free shares 4 5

Employee Share Ownership Plan (ESOP) – E ordinary shares to employees 4 7

Bonus Share Plan (BSP) 37 30

Long-Term Incentive Plan (LTIP) 21 12

Total employee compensation cost excluding equity-accounted joint ventures (note 10) 66 54

Black economic empowerment transaction modification cost for Izingwe defined in note 6. – 7

Total share-based payment expense 66 61

Included in:

– cost of sales 41 35

– corporate administration, marketing and other expenses 25 19

– special items (note 6) – 7

66 61

Equity-settled share incentive schemes

Employee Share Ownership Plan (ESOP)

On 12 December 2006, AngloGold Ashanti Limited announced the finalisation of the Bokamoso Employee Share Ownership Plan (Bokamoso ESOP) with the National Union of Mineworkers (NUM), Solidarity and United Association of South Africa (UASA). The Bokamoso ESOP creates an opportunity for AngloGold Ashanti Limited and the unions to ensure a closer alignment of the interest between South African-based employees and the company, and the seeking of shared growth solutions to build partnerships in areas of shared interest. Participation is restricted to those employees not eligible for participation in any other South African share incentive plan.

The company also undertook an empowerment transaction with a black economic empowerment investment vehicle, Izingwe, in 2006.

In order to facilitate this transaction the company established a trust to acquire and administer the ESOP shares. AngloGold Ashanti Limited allotted and issued free ordinary shares to the trust and also created, allotted and issued E ordinary shares to the trust for the benefit of employees. The company also created, allotted and issued E ordinary shares to Izingwe. The key terms of the E ordinary shares are:• AngloGold Ashanti Limited will have the right to cancel the E ordinary shares, or a portion of them, in accordance with the

ESOP and Izingwe cancellation formulae, respectively;• the E ordinary shares will not be listed;• the E ordinary shares which are not cancelled will be converted into ordinary shares; and• the E ordinary shares will each be entitled to receive a dividend equal to one-half of the dividend per ordinary share declared

by the company from time to time and a further one-half is included in the strike price calculation.

On 14 April 2011, AngloGold Ashanti Limited, NUM, Solidarity, UASA, Izingwe and the Bokamoso ESOP Board of Trustees announced the modification of the empowerment transactions concluded between the company and the unions, and the company and Izingwe respectively in 2006.

This modification was motivated by the fact that share price performance since the onset of the 2008 global financial crisis led to a situation where the first two tranches of E ordinary shares vested and lapsed at no additional value to Bokamoso ESOP beneficiaries and Izingwe.


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11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Employee Share Ownership Plan (ESOP) (continued)

In order to remedy this situation in a manner that would ensure an element of value accruing to participants, though at a reasonable incremental cost to AngloGold Ashanti Limited shareholders, the scheme was modified as follows: • all lapsed E ordinary shares that vested without value were reinstated;• the strike (base) price was fixed at R320.00 per share for the Bokamoso ESOP and R330.00 for Izingwe;• the notional interest charge that formed part of the original cancellation formula fell away;• as previously, 50% of any dividends declared was used to reduce the strike price;• as previously, the remaining 50% is paid directly to participants under the empowerment transaction; and• the life span of the scheme was extended by an additional one year, the last vesting being in 2014, instead of 2013.

A minimum payout on vesting of the E ordinary shares has been set at R40.00 each and a maximum payout of R70.00 each per E ordinary share for Izingwe and R90.00 each for members of the Bokamoso ESOP (i.e. employees), including the impact of the 50% of dividend flow. While the floor price provides certainty to all beneficiaries of the empowerment transactions, the creation of a ceiling serves to limit the cost to AngloGold Ashanti Limited and its shareholders.

The total incremental fair value of awards granted was R29.14 per share and will be included in earnings up to the vesting date in 2014. The company recorded a charge of $12m in 2011 to earnings as a result of the modification.

The award of free ordinary shares to employeesThe fair value of each free share awarded on 1 November each year was as follows:

Award date 2006 2007 2008 2011

Calculated fair value R320.00 R305.99 R188.48 R306.99

The fair value is equal to the market value at the date-of-grant. Dividends declared and paid to the trust will accrue and be paid to ESOP members, pro rata to the number of shares allocated to them. An equal number of shares vests from 2009 and each subsequent year up to the expiry date of 1 November 2013.

Accordingly, for the awards issued, the following information is available:

Number ofshares

Weightedaverage

exercise priceNumber of

shares

Weighted average

exercise price

2011 2012

434,941 – Awards outstanding at beginning of year 326,906 –

48,923 – Awards granted during the year – –

15,878 – Awards reallocated during the year 10,311 –

(15,878) – Awards lapsed during the year (10,311) –

(156,958) – Awards exercised during the year (172,149) –

326,906 – Awards outstanding at end of year 154,757 –

– – Awards exercisable at end of year – –

During 2012, the rights to a total of 10,311 (2011: 15,878) shares were surrendered by the participants. A cumulative total of 10,968 (2011: 21,562) shares were allotted to deceased, retired or retrenched employees. The income statement charge for the year was $4m (2011: $5m).


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The award of E ordinary shares to employees

Before the modification of the ESOP scheme the average fair value per share of the E ordinary shares awarded to employees on 1 November each year was as follows:

Award date 2006 2007 2008

Calculated fair value R105.00 R79.00 R13.40

After the modification of the ESOP scheme during April 2011, the average fair value per share of the E ordinary shares was R49.57.

Dividends declared in respect of the E ordinary shares will firstly be allocated to cover administration expenses of the trust, whereafter they will accrue and be paid to ESOP members, pro rata to the number of shares allocated to them. At each anniversary over a six year period commencing on the third anniversary of the original 2006 award, the company will cancel the relevant number of E ordinary shares as stipulated by a cancellation formula.

Any E ordinary shares remaining in that tranche will be converted to ordinary shares for the benefit of employees.

Accordingly, for the E ordinary shares issued, the following information is available:

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

1,686,126 366.30 Awards outstanding at beginning of year 1,532,962 315.31

769,164 320.00 Awards granted during the year – –

61,978 332.74 Awards reallocated during the year 32,064 312.97

(61,978) 332.74 Awards lapsed during the year (32,064) 312.97

(408,332) 320.39 Awards cancelled during the year – –

(513,996) 315.35 Awards converted during the year (615,210) 313.39

1,532,962 315.31 Awards outstanding at end of year 917,752 313.31

The weighted average exercise price is calculated as the initial grant price of R288.00 plus an interest factor less dividend apportionment up to April 2011. After that date the exercise price is calculated at the modified price of R320.00 less dividend apportionment. The income statement charge for the year was $4m (2011: $7m).

During 2012, the rights to a total of 32,064 (2011: 61,978) shares were surrendered by participants. A total of 615,210 (2011: 513,996) E ordinary shares were converted into 84,446 ordinary shares during the year. A total of nil (2011: 408,332) shares were cancelled as the result of the exercise price exceeding the share price on conversion date.


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The award of E ordinary shares to Izingwe

Before the modification of the scheme the average fair value of the E ordinary shares granted to Izingwe on 13 December 2006 was R90.00 per share. After the modification the average fair value of the E ordinary shares granted to Izingwe was R44.61 per share. Dividends declared in respect of the E ordinary shares will accrue and be paid to Izingwe, pro rata to the number of shares allocated to them. At each anniversary over a six-year period commencing on the third anniversary of the award, the company will cancel the relevant number of E ordinary shares as stipulated by a cancellation formula. Any E ordinary shares remaining in that tranche will be converted to ordinary shares for the benefit of Izingwe.


Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

1,120,000 366.30 E ordinary shares outstanding at the beginning of the year

1,050,000 325.31

560,000 330.00 E ordinary shares granted during the year – –

(350,000) 325.31 E Ordinary shares converted during the year (350,000) 323.31

(280,000) 326.21 E ordinary shares cancelled during the year – –

1,050,000 325.31 E ordinary shares outstanding at end of year 700,000 323.31

The weighted average exercise price is calculated as the initial grant price of R288.00 plus an interest factor less dividend apportionment up to April 2011. After that date the exercise price is calculated at the modified price of R330.00 less dividend apportionment. During 2011, the income statement charge for the period due to the modification of the empowerment transaction was $7m and was included in special items (note 6), $19m was expensed at inception of the scheme in 2006.

A total of 350,000 (2011: 350,000) E ordinary shares were converted into 48,532 ordinary shares during the year. A total of nil (2011: 280,000) shares were cancelled as the result of the exercise price exceeding the share price on conversion date.

The fair value of each share granted for the ESOP and Izingwe schemes was estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option award and share price volatility. Expected volatility is based on the historical volatility of AngloGold Ashanti Limited’s shares. These estimates involve inherent uncertainties and the application of management judgement. In addition, the company is required to estimate the expected forfeiture rate and only recognise expenses for those options expected to vest. As a result, if other assumptions had been used, the recorded share-based compensation expense could have been different from that reported.

The Black-Scholes option-pricing model used the following assumptions, at grant date:

2006 2007 2008 2011

Risk-free interest rate 7.00% 7.00% 7.00% 6.63%

Dividend yield 2.30% 2.06% 1.39% 0.99%

Volatility factor of market share price 36.00% 33.00% 35.00% 33.50%


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Bonus Share Plan (BSP)

The BSP is intended to provide effective incentives to eligible employees. An eligible employee is one who devotes substantially the whole of his working time to the business of AngloGold Ashanti Limited, any subsidiary of AngloGold Ashanti Limited or a company under the control of AngloGold Ashanti Limited, unless the board of directors (the board) excludes such a company. An award in terms of the BSP may be made at any date at the discretion of the board, the only vesting condition being three years’ service for awards granted prior to 2008. For all BSP awards granted from 2008, 40% will vest after one year and the remaining 60% will vest after two years. An additional 20% of the original award will be granted to employees if the full award remains unexercised after three years.

The board is required to determine a BSP award value and this will be converted to a share amount based on the closing price of AngloGold Ashanti Limited’s shares on the JSE on the last business day prior to the date of grant. AngloGold Ashanti Limited’s Remuneration Committee has at its discretion the right to pay dividends, or dividend equivalents, to the participants of the BSP. Having no history of any discretionary dividend payments, the fair value includes dividends and was used to determine the income statement expense.


Award date (unvested awards and awards vested during the year) 2009 2010 2011 2012

Calculated fair value R293.99 R280.90 R340.00 R 328.59

Vesting date (40%) 18 Feb 2010 24 Feb 2011 21 Feb 2012 21 Feb 2013

Vesting date (60%) 18 Feb 2011 24 Feb 2012 21 Feb 2013 21 Feb 2014

Vesting date (conditional 20%) 18 Feb 2012 24 Feb 2013 21 Feb 2014 21 Feb 2015

Expiry date 17 Feb 2019 23 Feb 2020 20 Feb 2021 20 Feb 2022

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

1,552,493 – Awards outstanding at beginning of year 1,825,378 –

820,847 – Awards granted during the year 993,146 –



1,825,378 – Awards outstanding at end of year 2,156,456 –

681,166 – Awards exercisable at end of year 880,774 –

During 2012, the rights to a total of 104,026 (2011: 81,113) shares were surrendered by the participants. A cumulative total of 22,835 (2011: 30,478) shares were allotted to deceased, retired or retrenched employees. The income statement charge for the year was $37m (2011: $30m).

Long-Term Incentive Plan (LTIP)

The LTIP is intended to provide effective incentives for executives to earn shares in the company based on the achievement of stretched company performance conditions. Participation in the LTIP will be offered to executive directors and selected senior management of participating companies. Participating companies include AngloGold Ashanti Limited, any subsidiary of AngloGold Ashanti Limited or a company under the control of AngloGold Ashanti Limited, unless the board excludes such a company.


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Long-Term Incentive Plan (LTIP) (continued)

An award in terms of the LTIP may be granted at any date during the year that the board of AngloGold Ashanti Limited determine and may even occur more than once a year. The board is required to determine an LTIP award value and this will be converted to a share amount based on the closing price of AngloGold Ashanti Limited’s shares on the JSE on the last business day prior to the date of grant. AngloGold Ashanti Limited’s Remuneration Committee has at its discretion the right to pay dividends, or dividend equivalents, to the participants of the LTIP. Having no history of any discretionary dividend payments, the fair value includes dividends and was used to determine the income statement expense.

The main performance conditions in terms of the LTIP issued in 2012, 2011, 2010 and 2009 are:• up to 30% of an award will be determined by the performance of total shareholder returns (TSR) compared with that of a

group of comparative gold-producing companies; • up to 30% of an award will be determined by real growth (above US inflation) in adjusted earnings per share over the

performance period;• up to 40% of an award will be dependent on the achievement of strategic performance measures which will be set by the

Remuneration Committee; and • three years’ service is required.

Accordingly, for the awards made, the following information is available:

Award date (unvested awards and awards vested during the year) 2009 2010 2011 2012

Calculated fair value R293.99 R280.90 R340.00 R328.59

Vesting date 18 Feb 2012 24 Feb 2013 21 Feb 2014 21 Feb 2015

Expiry date 17 Feb 2019 23 Feb 2020 20 Feb 2021 20 Feb 2022

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

1,599,690 – Awards outstanding at beginning of year 1,982,060 –

686,305 – Awards granted during the year 983,554 –



1,982,060 – Awards outstanding at end of year 2,330,906 –

242,145 – Awards exercisable at end of year 250,932 –

The income statement charge for the year was $21m (2011: $12m).

Performance-related share-based remuneration scheme – 1 May 2003

The options, if vested, may be exercised at the end of a three-year period commencing 1 May 2003. The share options were granted at an exercise price of R221.90. The performance condition applicable to these options was that the US dollar EPS must increase by at least 6% in real terms, after inflation, over the next three years, in order to vest. As none of the performance criteria were met in the initial three years, the grantor decided to roll the scheme forward on a ‘roll over reset’ basis, in February 2006, to be reviewed annually. The performance criteria of these options was achieved during 2006. The remaining weighted average contractual life of the options granted is 0.33 years. An employee would only be able to exercise his options after the date upon which he receives written notification from the directors that the previously specified performance criteria have been fulfilled.


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Performance-related share-based remuneration scheme – 1 May 2003 (continued)

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

112,960 217.49 Options outstanding at beginning of year 53,563 217.13

– – Options lapsed during the year (1,500) 221.90

(59,397) 217.82 Options exercised during the year (17,232) 217.15

– – Options expired during the year – –

53,563 217.13 Options outstanding at end of year 34,831 216.91

53,563 217.13 Options exercisable at end of year 34,831 216.91

There was no income statement charge for the year as the total compensation cost of $10m was expensed up to the date of vesting in 2006.

Performance-related share-based remuneration scheme – 1 November 2004

The options, if vested, may be exercised at the end of a three-year period commencing 1 November 2004. The share options were granted at an exercise price of R228.00. The performance condition applicable to these options was that US dollar EPS must increase from the 2004 year by at least 6% in real terms, i.e. after inflation, over the following three years in order to vest. The performance criteria was met during 2006. The remaining weighted average contractual life of options granted is 1.83 years. An employee would only be able to exercise his options after the date upon which he has received written notification from the directors that the previously specified performance criteria have been fulfilled.

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012


– – Options lapsed during the year – –

(72,636) 221.11 Options exercised during the year (21,252) 222.96

– – Options expired during the year – –

78,134 221.89 Options outstanding at end of year 56,882 221.49

78,134 221.89 Options exercisable at end of year 56,882 221.49

There was no income statement charge for the year as the total compensation cost of $3m was expensed up to the date of vesting in 2007.


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11 Share-based payments (continued)Equity-settled share incentive schemes (continued)

There is currently an equity-settled share incentive scheme that falls outside the transitional provisions of IFRS 2, as the options were granted prior to 7 November 2002. The details are as follows:

Performance-related share-based remuneration scheme – 1 May 2002

The share options were granted at an exercise price of R299.50 per share. The performance condition applicable to these options was that US dollar EPS must increase by 7.5% for each of the three succeeding years. On 24 December 2002, the company underwent a share split on a 2:1 basis. The EPS target was reduced accordingly. As none of the performance criteria was met in the initial three years, AngloGold Ashanti Limited decided to roll the scheme forward on a ‘roll over reset’ basis, to be reviewed annually. The performance criteria of these options were achieved during 2006. An employee would only be able to exercise his options after the date upon which he receives written notification from the directors that the previously specified performance criteria have been fulfilled.

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012


– – Options lapsed during the year (29,570) 298.18 (88,755) 287.43 Options exercised during the year (8,623) 240.49

– – Options expired during the year – – 39,447 283.37 Options outstanding at end of year 1,254 229.00 39,447 283.37 Options exercisable at end of year 1,254 229.00

Cash-settled share incentive scheme

Ghana Employee Share Ownership Plan (Ghana ESOP)

A memorandum of understanding was signed with the Ghanaian employees on 28 April 2009 to usher in the Ghana ESOP under defined rules.

In terms of the rules of the scheme, every eligible employee is entitled to 20 AngloGold Ashanti Limited share appreciation rights (phantom shares), which will be paid out in four equal tranches, commencing in May 2009 and ending in May 2012.

The value of the rights are equal to the value of AngloGold Ashanti Limited American Depositary Receipts (ADRs) as listed on the New York Stock Exchange, converted into Ghanaian cedis at the prevailing US dollar exchange rate.

The share price on the day of issue as at 29 April 2009 was $32.15, whilst the share price used in the payment of the fourth tranche was $33.55 per share (first tranche: $28.46, second tranche: $39.50, third tranche: $49.24).

The award of share appreciation rights to employees

Accordingly, for the rights issued, the following information is available:

Number ofshares

Weightedaverage


shares

Weighted average

exercise price

2011 2012

49,125 – Rights outstanding at beginning of year 23,525 –

– – Rights granted during the year – – – – Rights reallocated during the year 760 –

(1,355) – Rights lapsed during the year (330) – (24,245) – Rights exercised during the year (23,955) – 23,525 – Rights outstanding at end of year – –

– – Rights exercisable at end of year – –

During 2012, a total of 330 (2011: 1,355) share appreciation rights were surrendered by the participants. The income statement charge for the year was less than $1m (2011: less than $1m). The liability recognised in other payables in the statement of financial position in respect of unexercised rights was nil (2011: $1m).


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12 Taxation South African taxation

Mining tax 54 113 Non-mining tax (1) 18 12 (Over) under provision prior year (3) 4 Deferred taxation

Temporary differences (2) 66 222 Unrealised non-hedge derivatives and other commodity contracts (10) – Change in estimated deferred tax rate (3) (9) 9 Change in statutory tax rate (1) (4) (131) –

(15) 360 Foreign taxation

Normal taxation (5) 353 275 (Over) under provision prior year (9) 3 Deferred taxation

Temporary differences (2) (48) 85 Change in statutory tax rate (1) 41 –

337 363

322 723

Tax rate reconciliationA reconciliation of the effective tax rate in the income statement to the prevailing estimated corporate tax rate is set out in the following table:

% % Effective tax rate 27 31 Disallowable items

Derivative and other commodity contracts losses and fair value gains 6 3 Transaction and finance costs – (1)Share of equity-accounted investments’ (loss) profit (1) 1 Exploration, corporate and other disallowable expenses (11) (3)

Foreign income tax allowances and rate differentials (6) 2 Exchange variation and translation adjustments (1) (2)Current unrecognised tax assets 1 4 Change in estimated deferred tax rate (3) 1 – Change in statutory tax rate (1) (4) 8 – Other 4 – Estimated corporate tax rate (1) 28 35

(1) During the financial year, there were changes in the South African and Ghanaian statutory tax rates. These rate changes are summarised as follows:

South Africa Non-mining statutory tax rate 28% (2011: 35%); and Maximum statutory mining tax rate 34% (2011: 43%) – refer mining formula in footnote 4. Ghana Statutory company tax rate 35%, however limited to 30% as AngloGold Ashanti Limited has a special tax rate concession

under its Stability Agreement (2011: 25%).


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12 Taxation (continued)(2) Included in temporary differences in South African taxation is a tax credit on the impairment, derecognition and disposal of

tangible assets of $16m (2011: $11m). Included in temporary differences of foreign taxation is a tax credit on the impairment and disposal of tangible assets of $90m (2011: tax charge: $42m).

(3) In South Africa, the mining operations are taxed on a variable rate that increases as profitability increases. The tax rate used to calculate deferred tax is based on the group’s current estimate of future profitability when temporary differences will reverse. Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. The change in the estimated deferred tax rate at which the temporary differences will reverse amounts to a tax credit of $9m (2011: tax charge of $9m).

(4) Mining tax on mining income in South Africa is determined according to a formula based on profit and revenue from mining operations.

All mining capital expenditure is deducted to the extent that it does not result in an assessed loss and depreciation is ignored when calculating the South African mining income. Capital expenditure not deducted from mining income is carried forward as unredeemed capital to be deducted from future mining income. South Africa operates under two tax paying operations, Vaal River Operation and West Wits Operation. Under ring-fencing legislation, each operation is treated separately and deductions can only be utilised against income generated by the relevant tax operation.

The formula for determining the South African mining tax rate is:

Y = 34 – 170/X (2011: Y = 43 – 215/X)

where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to mining revenue expressed as a percentage.

(5) Included in normal foreign taxation is a tax credit on the disposal of tangible assets of $1m (2011: tax charge of $1m).


Analysis of unrecognised tax losses

Tax losses available to be utilised against future profits

– utilisation required within one year 5 –

– utilisation required between two and five years – 5

– utilisation in excess of five years 263 149

268 154

Unrecognised tax losses utilised

Assessed losses utilised during the year – 236


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Figures in US cents 2012 2011

13 Earnings per ordinary shareBasic earnings per ordinary shareThe calculation of basic earnings per ordinary share is based on profits attributable to equity shareholders of $830m (2011: $1,552m) and 386,766,345 (2011: 385,961,613) shares being the weighted average number of ordinary shares in issue during the financial year. 215 402

Diluted earnings per ordinary shareThe calculation of diluted earnings per ordinary share is based on profits attributable to equity shareholders of $680m (2011: $1,458m) and 422,131,159 (2011: 421,058,243) shares being the diluted number of ordinary shares. 161 346

Number of shares 2012 2011

In calculating the basic and diluted number of ordinary shares outstanding for the year, the following were taken into consideration:

Ordinary shares 382,757,790 381,621,687

E ordinary shares (1) 2,392,316 2,950,804

Fully vested options (2) 1,616,239 1,389,122

Weighted average number of shares 386,766,345 385,961,613

Dilutive potential of share options 1,840,199 1,572,015

Dilutive potential of convertible bonds 33,524,615 33,524,615

Diluted number of ordinary shares 422,131,159 421,058,243


In calculating the diluted earnings attributable to equity shareholders, the following were taken into consideration:

Profit attributable to equity shareholders 830 1,552

Interest expense of convertible bonds, where dilutive 63 63

Amortisation of issue cost and discount of convertible bonds 32 31

Fair value adjustment on convertible bonds included in income (245) (188)

Profit attributable to equity shareholders used to calculate diluted earnings per share 680 1,458

The mandatory convertible bonds issued during 2010 (note 26) are not included in basic earnings per ordinary share as they contain features that could result in their settlement in cash and therefore do not meet the definition of an equity instrument.

(1) As E ordinary shares participate in the profit available to ordinary shareholders, these shares were included in basic earnings per share.

(2) Employee compensation awards are included in basic earnings per share from the date that all necessary conditions have been satisfied and it is virtually certain that shares will be issued as a result of employees exercising their options.


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13 Earnings per ordinary share (continued)Headline earnings The profit attributable to equity shareholders was adjusted by the following to arrive at headline earnings:

Profit attributable to equity shareholders 830 1,552

Net impairment (reversal) and derecognition of tangible assets (notes 6 and 15) 356 (120)

Tax on item above (106) 36

Net amount 250 (84)

Net loss on disposal and derecognition of land, mineral rights, tangible assets and exploration properties (notes 6 and 15) 15 8

Tax on item above (4) (5)

Net amount 11 3

Impairment reversal of intangible assets (notes 6 and 16) (10) –

Tax on item above 3 –

Net amount (7) –

Impairments of other investments (notes 6 and 18) 16 21

Profit on disposal of subsidiary ISS International Limited (note 6) – (2)

Profit on partial disposal of Rand Refinery Limited (note 6) (14) –

Impairment of investment in associates and joint ventures (notes 8 and 17) 59 16

Reversal of impairment in associates and joint venture (notes 8 and 24) (2) (20)

Loss on disposal of loan to joint venture (notes 8 and 17) 2 –

Insurance claim recovery on capital items (note 6) – (3)

Tax on item above – 1

Net amount – (2)

1,145 1,484

Headline earnings is calculated in accordance with Circular 3/2012 issued by the South African Institute of Chartered Accountants (SAICA).

Figures in US cents 2012 2011

Basic headline earnings per share The calculation of basic headline earnings per ordinary share is based on basic headline earnings of $1,145m (2011: $1,484m) and 386,766,345 (2011: 385,961,613) shares being the weighted average number of ordinary shares in issue during the year. 296 384

Diluted headline earnings per share The calculation of diluted headline earnings per ordinary share is based on diluted headline earnings of $995m (2011: $1,390m) and 422,131,159 (2011: 421,058,423) shares being the weighted average number of ordinary shares in issue during the year. 236 330


In calculating diluted headline earnings, the following were taken into consideration:

Headline earnings 1,145 1,484

Interest expense of convertible bonds, where dilutive 63 63

Amortisation of issue cost and discount of convertible bonds 32 31

Fair value adjustment on convertible bonds included in income (245) (188)

Diluted headline earnings 995 1,390


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14 Dividends

Ordinary shares

No. 109 of 80 SA cents per share was declared on 15 February 2011 and paid on 18 March 2011 (11 US cents per share). – 43

No. 110 of 90 SA cents per share was declared on 2 August 2011 and paid on 9 September 2011 (12 US cents per share). – 46

No. 111 of 90 SA cents per share was declared on 7 November 2011 and paid on 9 December 2011 (11 US cents per share). – 42

No. 112 of 200 SA cents per share was declared on 14 February 2012 and paid on 16 March 2012 (26 US cents per share). 101 –

No. 113 of 100 SA cents per share was declared on 8 May 2012 and paid on 8 June 2012 (12 US cents per share). 45 –

No. 114 of 100 SA cents per share was declared on 3 August 2012 and paid on 14 September 2012 (12 US cents per share). 47 –

No. 115 of 50 SA cents per share was declared on 6 November 2012 and paid on 14 December 2012 (6 US cents per share). 22 –

E ordinary shares

No. E9 of 40 SA cents per share was declared on 15 February 2011 and paid on 18 March 2011 (5.5 US cents per share). – –

No. E10 of 45 SA cents per share was declared on 2 August 2011 and paid on 9 September 2011 (6 US cents per share). – –

No. E11 of 45 SA cents per share was declared on 7 November 2011 and paid on 9 December 2011 (5.5 US cents per share). – –

No. E12 of 100 SA cents per share was declared on 14 February 2012 and paid on 16 March 2012 (13 US cents per share). – –

No. E13 of 50 SA cents per share was declared on 8 May 2012 and paid on 8 June 2012 (6 US cents per share). – –

No. E14 of 50 SA cents per share was declared on 3 August 2012 and paid on 14 September 2012 (6 US cents per share). – –

No. E15 of 25 SA cents per share was declared on 6 November 2012 and paid on 14 December 2012 (3 US cents per share). – –

215 131

No. 116 of 50 SA cents per ordinary share was declared on 18 February 2013 and will be paid on 28 March 2013 (approximately 6 US cents per share). The actual rate of payment will depend on the exchange rate on the date of currency conversion.

No. E16 of 25 SA cents per E ordinary share was declared on 18 February 2013 and will be paid on 28 March 2013 (approximately 3 US cents per share). The actual rate of payment will depend on the exchange rate on the date of currency conversion.


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Figures in million (US dollars)

Minedevelop-

mentcosts

Mineinfra-

structure

Mineralrights

anddumps

Explo-ration

andevaluation

assets

Assetsundercon-

struction

Land and

buildings Total

15 Tangible assets

Cost

Balance at 1 January 2011 7,310 3,222 1,065 34 502 74 12,207

Additions

– project capital 74 2 – – 377 3 456

– stay-in-business capital 502 279 – – 182 3 966

Disposals (7) (20) – – – – (27)

Transfers and other movements (1) 175 276 – – (493) – (42)

Finance costs capitalised (note 7) (2) – – – – 3 – 3

Translation (699) (156) (15) – (40) (8) (918)

Balance at 31 December 2011 7,355 3,603 1,050 34 531 72 12,645

Accumulated amortisation and impairments

Balance at 1 January 2011 3,719 1,678 532 31 58 9 6,027

Amortisation for the year (notes 4, 9 and 32) 529 227 9 1 – 2 768

Impairment and derecognition of assets (notes 6 and 13) (3) 9 6 – – – – 15

Impairment reversal (notes 6 and 13) (3) (76) – (59) – – – (135)

Disposals (6) (19) – – – – (25)

Transfers and other movements (1) (12) (27) – – – – (39)

Translation (391) (82) (8) – (9) (1) (491)

Balance at 31 December 2011 3,772 1,783 474 32 49 10 6,120

Net book value at 31 December 2011 3,583 1,820 576 2 482 62 6,525

Cost

Balance at 1 January 2012 7,355 3,603 1,050 34 531 72 12,645

Additions

– project capital 133 51 – – 601 6 791

– stay-in-business capital 457 328 – 2 192 3 982

Acquisition of subsidiary (note 33) – 603 8 – – 5 616

Disposals (1) (26) – – – – (27)

Disposal of subsidiary (note 33) – (72) – – – (3) (75)

Transfers and other movements (1) 135 243 (110) – (239) (1) 28

Finance costs capitalised (note 7) (2) – – – – 12 – 12

Translation (166) (53) (3) (1) (13) (2) (238)

Balance at 31 December 2012 7,913 4,677 945 35 1,084 80 14,734


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Figures in million (US dollars)

Minedevelop-

mentcosts

Mineinfra-

structure

Mineralrights

anddumps

Explo-ration

andevaluation

assets

Assetsundercon-

struction

Land and

buildings Total

15 Tangible assets (continued)Accumulated amortisation and impairments

Balance at 1 January 2012 3,772 1,783 474 32 49 10 6,120

Amortisation for the year (notes 4, 9 and 32) 504 279 8 – – 2 793

Impairment and derecognition of assets (notes 6 and 13) (3) 254 87 – – 15 – 356

Disposals (1) (25) – – – – (26)

Disposal of subsidiary (note 33) – (22) – – – – (22)

Transfers and other movements (1) 32 (8) (41) – – – (17)

Translation (94) (19) (2) (1) (1) (1) (118)

Balance at 31 December 2012 4,467 2,075 439 31 63 11 7,086

Net book value at 31 December 2012 3,446 2,602 506 4 1,021 69 7,648

Included in the amounts for mine infrastructure are assets held under finance leases with a net book value of $40m (2011: $45m). Included in the amounts for land and buildings are assets held under finance leases with a net book value of $19m (2011: $22m).

The majority of the leased assets are pledged as security for the related finance leases.

No assets are encumbered by project finance.

(1) Transfers and other movements include amounts from deferred stripping, change in estimates of decommissioning assets, asset reclassifications and amounts written off of $15m (2011: $8m) (notes 6 and 13).

(2) The weighted average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation was 6.54% (2011: 6.86%). Interest capitalised relates to the Tropicana project in Australia.

(3) Impairment, derecognition of assets and impairment reversal include the following:


Impairment of cash generating unit

South Africa

Great Noligwa mine – cash generating unit 31 –

The Great Noligwa cash generating unit impairment resulted from a revised mine plan. Factors such as reduction in Ore Reserve resulting from resource model changes, abandonment of certain areas, grade factors and an increase in the cost of extraction affected the mine plan. As a result, Great Noligwa’s recoverable amount did not support its carrying value in 2012 and an impairment loss was recognised for mine development of $25m and mine infrastructure of $6m. The recoverable amount was determined using a real pre-tax discount of 13% and was based on the impairment assumptions detailed overleaf.


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15 Tangible assets (continued)

Derecognition of assets

South Africa

Kopanang – mine development costs 14 –

Due to changes in the mine plan, certain areas have been abandoned and will not generate future cash flows.

TauTona VCR shaft pillar and ore pass – mine development costs and mine infrastructure – 9

In 2011, due to a change in the mine plan resulting from safety-related concerns following seismic activity, the VCR shaft pillar and ore pass development were abandoned.

Savuka – mine development costs – 1

In 2011, due to a change in the mine plan, the Savuka assets were abandoned.

Guinea

Siguiri – mine development costs 14 –

Due to depleted reserves in Sintroko, Kozan and Kintinia pits, exploration and pit dewatering costs previously capitalised will not generate future economic value. Certain areas were also abandoned due to safety-related concerns.

Ghana

Obuasi – mine infrastructure, mine development costs and assets under construction 296 –

Due to a change in the mine plan, certain areas have been abandoned mainly due to depletion of reserves and assets in poor physical condition or considered obsolete have also been derecognised. A loss was recognised for mine infrastructure of $80m, mine development of $201m and assets under construction of $15m.

Other

Derecognition of other mine infrastructure. 1 5

356 15

Impairment reversal of cash generating unit

Tanzania

Geita mine – cash generating unit – 135

The Geita mine impairment recognised in 2008 was reversed. The impairment reversal was largely due to an increase in the long-term real gold price, improved production, higher grades and lower unit costs, resulting in increased future discounted cash flows. The recoverable amount was determined using a real pre-tax discount rate of 12.3% and was based on the impairment assumptions detailed overleaf.


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15 Tangible assets (continued)

Impairment calculation assumptions – tangible assets and goodwill

Management assumptions for the value in use of tangible assets and goodwill include:• the gold price assumption represents management’s best estimate of the future price of gold. In arriving at the estimated

long-term gold price, management considered all available market information, including current prices, historical averages, and forward-pricing curves. A long-term real gold price of $1,584/oz (2011: $1,530/oz) is based on a range of economic and market conditions that will exist over the remaining useful life of the assets.

Annual life of mine plans take into account the following:• proved and probable Ore Reserve;• value beyond proved and probable reserves (including exploration potential) determined using the gold price assumption

referred to above;• the real pre-tax discount rate is derived from the group’s weighted average cost of capital (WACC) and risk factors which

is consistent with the basis used in 2011. The WACC of 5.3% which is the same as 2011 is based on the average capital structure of the group and three major gold companies considered to be appropriate peers. The risk factors considered are country risk as well as project risk for cash flows relating to mines that are not yet in production and deep level mining projects. The country risk factor is based on the group’s internal assessment of country risk relative to the issues experienced in the countries in which it operates and explores;

• foreign currency cash flows translated at estimated forward exchange rates and then discounted using appropriate discount rates for that currency;

• cash flows used in impairment calculations are based on life of mine plans which exceed five years for the majority of the mines; and

• variable operating cash flows are increased at local Consumer Price Index rates.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each cash generating unit. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. The cash flows are significantly affected by a number of factors including reserves and production estimates, together with economic factors such as spot gold prices, discount rates, foreign currency exchange rates, estimates of costs to produce reserves and future capital expenditure.

Should management’s estimate of the future not reflect actual events, further impairments may be identified. Factors affecting the estimates include: • changes in proved and probable Ore Reserve as well as value beyond proved and probable reserves;• the grade of Ore Reserve as well as value beyond proved and probable reserves may vary significantly from time to time; • differences between actual commodity prices and commodity price assumptions; • unforeseen operational issues at mine sites; and • changes in capital, operating mining, processing and reclamation costs and foreign exchange rates.

There were no impairment indicators for cash generating units during 2011.


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Figures in million (US dollars) Goodwill

Software and

licences

Royalty,tax rate

concessionand other Total

16 Intangible assetsCostBalance at 1 January 2011 433 – 50 483 Additions – 16 – 16 Translation 2 – – 2 Balance at 31 December 2011 435 16 50 501

Accumulated amortisation and impairments

Balance at 1 January 2011 256 – 33 289 Amortisation for the year (notes 4 and 32) (1) – – 2 2 Balance at 31 December 2011 256 – 35 291 Net book value at 31 December 2011 (2) 179 16 15 210

CostBalance at 1 January 2012 435 16 50 501 Additions – 78 1 79 Acquisition of subsidiary (note 33) 14 – – 14 Transfers and other movements – – 7 7 Translation 2 (2) – –Balance at 31 December 2012 451 92 58 601

Accumulated amortisation and impairmentsBalance at 1 January 2012 256 – 35 291 Amortisation for the year (notes 4 and 32) (1) – – 5 5 Impairment reversal (notes 6 and 13) (3) – – (10) (10)Balance at 31 December 2012 256 – 30 286 Net book value at 31 December 2012 (2) 195 92 28 315 (1) No amortisation was recorded for purchased software and licences as these assets are not yet available for use.


(2) Net book value of goodwill allocated to each of the cash generating units (CGUs): – Sunrise Dam 159 156 – AngloGold Ashanti Córrego do Sitío Mineração 15 15 – First Uranium (Pty) Limited 13 – – Serra Grande 8 8 (note 2) 195 179

Real pre-tax discount rates applied in impairment calculations on CGUs for which the carrying amount of goodwill is significant are as follows:

Sunrise Dam (4) 6.1% 8.4%(3) As part of the stability agreement entered into in 2004, the Government of Ghana agreed to a concession on the royalty

payments by maintaining a rate of 3% for 15 years from 2004. The impairment reversal relates to the corporate tax rate concession which was granted at a rate of 30% for the Ashanti business combination in 2004. During 2005, the corporate tax rate in Ghana decreased to 25% and the tax rate concession, which expires in 2019, was fully impaired. During 2012, the corporate tax rate on mining companies was increased from 25% to 35% resulting in an impairment reversal.

(4) The discount rates for 2012 were determined on a basis consistent with the 2011 discount rates. The value in use recoverable amount of the CGU is $1,543m (2011: $821m).


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17 Investments in equity-accounted associates and joint venturesCarrying value of investments in equity-accounted associates and joint ventures

Investments in associates 92 47

Investments in joint ventures 968 655

1,060 702

Investments in associates comprise:

Name Effective % DescriptionCarrying value

(US dollars million)

2012 2011 2012 2011

Listed associates

Trans-Siberian Gold plc (1) (2) 31.17 30.90 Exploration and development of gold mines

22 35

Mariana Resources Limited (1) (2) (3) 19.86 19.86 Exploration and mine development 7 7

Unlisted associates

Rand Refinery Limited (note 33) 48.03 – Smelting and refining of gold 57 –

Oro Group (Pty) Limited (1) 36.00 25.00 Manufacture and wholesale of jewellery 6 5

Margaret Water Company 33.33 33.33 Pumping of underground water in the Vaal River region

– –

92 47


Net impairments of investments in associates

Trans-Siberian Gold plc (17) (2)

Margaret Water Company (1) (1)

Mariana Resources Limited – (1)

Orpheo (Pty) Limited (4) – (1)

(Notes 8 and 13) (18) (5)

The impairment indicators considered the quoted share price, current financial position and operating results. Impairments of $20m (2011: $5m) were recorded and an impairment reversal of $2m (2011: nil) was recognised in the income statement relating to Trans-Siberian Gold plc due to the increase in the listed share price.

(1) Equity accounting is based on results to 30 September 2012, adjusted for material transactions.

(2) At 31 December 2012, the fair value of the group’s investment in Trans-Siberian Gold plc and Mariana Resources Limited was $22m (2011: $35m) and $3m (2011: $7m) respectively.

(3) The group has the right to representation on the Mariana Resources Limited board of directors and is therefore considered to have significant influence in the company.

(4) Sold effective 1 July 2011.


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17 Investments in equity-accounted associates and joint ventures (continued)

Summarised financial information of associates is as follows (not attributable):

Statement of financial position

Non-current assets 208 163

Current assets 113 56

Total assets 321 219

Non-current liabilities 47 73

Current liabilities 52 29

Total liabilities 99 102

Net assets 222 117

Income statement

Revenue 72 51

Costs and expenses (63) (53)

Taxation 1 (1)

Profit (loss) after taxation 10 (3)

Investments in joint ventures comprise:

Name Effective % DescriptionCarrying value

(US dollars million)

2012 2011 2012 2011

AuruMar (Pty) Limited 50 50 Global exploration of marine deposits containing gold as the primary mineral

2 5

Thani Ashanti Alliance Limited 50 50 Gold exploration activities 1 21

Kibali Goldmines s.p.r.l. 45 45 Exploration and development of gold mines

797 497

Société des Mines de Morila S.A. 40 40 Commercial exploitation of gold 19 41

Société d’Exploitation des Mines d’Or de Sadiola S.A.

41 41 Commercial exploitation of gold 149 91

Société d’Exploitation des Mines d’Or de Yatela S.A.

40 40 Commercial exploitation of gold – –

968 655


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17 Investments in equity-accounted associates and joint ventures (continued)

(Impairment) reversal of investments in joint ventures

Thani Ashanti Alliance Limited (37) –

Société d’Exploitation des Mines d’Or de Yatela S.A. (2) (11)

AGA-Polymetal Strategic Alliance – 20

(39) 9

Loss on disposal of loan to joint venture

AuruMar (Pty) Limited (2) –

(Notes 8 and 13) (41) 9

The impairment indicators considered the current financial position and operating results. Impairments of $39m (2011: $11m) were recorded and an impairment reversal of nil (2011: $20m) was recognised in the income statement. During 2011, the AGA-Polymetal Strategic Alliance impairment of $20m was reversed to increase the carrying amount of the investment to fair value less costs to sell (note 24).

Summarised financial information of joint ventures is as follows (not attributable):

Statement of financial position

Non-current assets 1,490 773

Current assets 416 352

Total assets 1,906 1,125

Non-current liabilities 1,018 356

Current liabilities 334 185

Total liabilities 1,352 541

Net assets 554 584

Income statement

Revenue 882 975

Costs and expenses (709) (662)

Taxation (81) (127)

Profit after taxation 92 186


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18 Other investments

Listed investments

Available-for-sale

Balance at beginning of year 82 124

Additions 6 47

Acquisition of subsidiary (note 33) 3 –

Disposals – (2)

Fair value adjustments (12) (59)

Impairments (notes 6 and 13) (1) (8) (21)

Translation (2) (7)

Balance at end of year 69 82

The available-for-sale investments consist of ordinary shares and collective investment schemes and primarily comprise:

International Tower Hill Mines Limited (ITH) 24 43

Various listed investments held by Environmental Rehabilitation Trust Fund 22 18

Other 23 21

69 82

The group’s listed available-for-sale equity investments are susceptible to market price risk arising from uncertainties about the future values of the investments.

At the reporting date, the majority of equity investments were listed on the Toronto Stock Exchange and the JSE.

Based on the share price of ITH over the past year and carrying value at 31 December 2012 of $24m, if ITH achieved the high that it achieved during 2012 of C$5.61 per share, other comprehensive income (OCI) would increase by $38m. If it achieved the low of C$1.85 per share, OCI would decrease by $4m. If the decrease was significant or prolonged, an impairment would be recorded.

The exposure to listed shares held by the Environmental Rehabilitation Trust Fund at fair value on the JSE was $22m. An analysis based on the assumption that the equity index (ALSI on the JSE) had increased/decreased by 10% with all other variables held constant and all the group’s JSE listed equity investments moved according to the ALSI, would impact OCI by $2.2m. If the decrease was significant or prolonged, an impairment would be recorded.

(1) Impairment of First Uranium Corp. shares of $5m (2011: $19m), Stratex International plc shares of $2m (2011: nil), Commander Resources Limited shares of $1m (2011: nil) and Village Main Reef Limited shares of nil (2011: $2m) due to a significant decline in market value.


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18 Other investments (continued)

Listed investments (continued)

Held-to-maturity


Maturities – (3)

Translation (1) (2)


The held-to-maturity investment consists of government bonds held by the Environmental Rehabilitation Trust Fund administered by RMB Private Bank.

The market value of bonds held-to-maturity is $11m (2011: $11m) and has a sensitivity of less than $1m (2011: $1m) for a 1% change in interest rates.

Book value of listed investments 76 90

Market value of listed investments 80 93

Unlisted investments

Available-for-sale


Impairment (notes 6 and 13) (2) (7) –


The available-for-sale investments consist primarily of XDM Resources Limited.

Held-to-maturity


Additions 91 101

Maturities (85) (87)

Translation (4) (18)


The held-to-maturity investments include:

Negotiable Certificates of Deposit – Environmental Rehabilitation Trust Fund administered by RMB Private Bank 81 80

Nufcor Uranium Trust Fund 5 5

Other 3 2

89 87

Book value of unlisted investments 91 96

Fair value of unlisted investments (2) (3) 91 87

Total book value of other investments (note 36) 167 186

Total fair value of other investments (note 36) (2) (3) 171 180

(2) In 2012, XDM Resources Limited was impaired by $7m (2011: nil) due to a significant decline in value. The fair value of this unlisted equity investment was based on a share price of C$0.25 per share, being the issue price obtained in a private equity raising which was completed during December 2012.

(3) In 2011, there was no market for the unlisted equity investments and therefore fair value could not be measured reliably. The unlisted equity investments were carried at cost and were not included in the fair value calculations.


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19 InventoriesNon-current

Raw materials

– heap-leach inventory 436 386

– ore stockpiles (1) 174 24

Total metal inventories 610 410

Current

Raw materials

– ore stockpiles 506 461

– heap-leach inventory 128 98

Work in progress

– metals in process 139 91

Finished goods

– gold doré/bullion 91 94

– by-products 11 24

Total metal inventories 875 768

Mine operating supplies 412 296

1,287 1,064

Total inventories (2) 1,897 1,474

(1) Includes non-current ore stockpiles of First Uranium (Pty) Limited acquired during July 2012, as disclosed in note 33.

(2) The amount of the write-down of ore stockpiles, metals in process, gold doré/bullion, by-products and mine operating supplies to net realisable value, and recognised as an expense is $5m (2011: $4m). This expense is included in cost of sales which is disclosed in note 4.

20 Other non-current assetsPost-retirement medical scheme for Rand Refinery employees (note 28) – 2

Ashanti Retired Staff Pension Fund (note 28) – 1

Loans and receivables

Loan receivable at 31 December 2020 bearing interest at 8% per annum 6 6

Other non-interest bearing loans and receivables – receivable on various dates 1 –

7 9


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21 Trade and other receivablesNon-currentPrepayments and accrued income 31 22 Recoverable tax, rebates, levies and duties 20 14 Reclamation sites trust fund 22 30 Deferred loan fees 6 9 Other receivables – 1

79 76

Current

Trade and loan receivables 149 46 Prepayments and accrued income 86 80 Recoverable tax, rebates, levies and duties 221 170 Amounts due from related parties 2 3 Interest receivable 1 3 Royalties receivable – 14 Deferred loan fees 2 5 Other receivables 9 29

470 350

Total trade and other receivables 549 426

Current trade and loan receivables are generally on terms less than 90 days.

There is no concentration of credit risk with respect to trade receivables, as the group has a large number of internationally dispersed customers.

During the year, other receivables were impaired by $1m (2011: $14m). This expense is included in special items which is disclosed in note 6.

There is a concentration of risk in respect of recoverable value added tax, fuel duties and appeal deposits from the Tanzanian government. The outstanding amounts have been discounted to their present value at a rate of 7.82%.

The recoverable value added tax, fuel duties and appeal deposits are summarised as follows:

Recoverable value added tax 16

Recoverable fuel duties (1) 35

Appeal deposits 4

(1) Fuel duty claims are required to be submitted after consumption of the related fuel and are subject to authorisation by the Customs and Excise authorities.

22 Cash restricted for useNon-current

Cash restricted by prudential solvency requirements 1 1 Cash balances held by Environmental Rehabilitation Trust Funds 28 22

29 23

Current

Cash restricted by prudential solvency requirements 11 9 Cash balances held by the Tropicana joint venture 23 22 Other 1 4

35 35

Total cash restricted for use (notes 36 and 37) 64 58


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23 Cash and cash equivalentsCash and deposits on call 595 499

Money market instruments 297 613

(notes 36 and 37) 892 1,112

24 Non-current assets held for sale

Effective December 2007, Rand Refinery allocated parts of its premises that were no longer utilised, to assets held for sale. On 1 April 2008, a sale agreement was concluded subject to the suspensive condition regarding rezoning of the land and transfer of title deeds.

– 1

Effective 2 December 2011, the AGA-Polymetal Strategic Alliance consisting of AGA-Polymetal Strategic Alliance Management Company Holdings Limited, Amikan Holding Limited, AS APK Holdings Limited, Imitzoloto Holdings Limited and Yeniseiskaya Holdings Limited were classified as held for sale. AngloGold Ashanti Holdings plc, a wholly owned subsidiary entered into a contractual agreement with Polyholding Limited relating to the disposal of these entities. A reversal of previous impairment losses recognised of $20m was recognised in share of equity-accounted investments’ profit to increase the carrying amount of the investment to fair value less costs to sell (notes 8, 13 and 17). The transaction was completed on 8 February 2012.

– 20

Total non-current assets held for sale (note 2) – 21

25 Share capital and premiumShare capital

Authorised

600,000,000 ordinary shares of 25 SA cents each 23 23

4,280,000 E ordinary shares of 25 SA cents each – –

2,000,000 A redeemable preference shares of 50 SA cents each – –

5,000,000 B redeemable preference shares of 1 SA cent each – –

23 23

Issued and fully paid

383,320,962 (2011: 382,242,343) ordinary shares of 25 SA cents each 16 16

1,617,752 (2011: 2,582,962) E ordinary shares of 25 SA cents each – –

2,000,000 (2011: 2,000,000) A redeemable preference shares of 50 SA cents each – –

778,896 (2011: 778,896) B redeemable preference shares of 1 SA cent each – –

16 16

Treasury shares held within the group:

2,778,896 (2011: 2,778,896) A and B redeemable preference shares – –

154,757 (2011: 326,906) ordinary shares – –

917,752 (2011: 1,532,962) E ordinary shares – –

16 16


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25 Share capital and premium (continued)Share premium

Balance at beginning of year 6,766 6,718

Ordinary shares issued 46 57

E ordinary shares issued and cancelled (7) (9)

6,805 6,766

Less: held within the group

Redeemable preference shares (53) (53)

Ordinary shares (10) (17)

E ordinary shares (16) (23)

Balance at end of year 6,726 6,673

Share capital and premium 6,742 6,689

The rights and restrictions applicable to the A and B redeemable preference shares:

A redeemable preference shares are entitled to:• an annual dividend, after payment in full of the annual dividend on the B preference shares, equivalent to the balance of after

tax profits from mining the Moab Mining Right Area; and• on redemption, the nominal value of the shares and a premium per share equal to the balance of the net proceeds from

disposal of assets relating to the Moab Mining Right Area, after redemption in full of the B preference shares and payments of the nominal value of the A preference shares.

B redeemable preference shares are entitled to:• an annual dividend limited to a maximum of 5% of their issue price from the period that profits are generated from the Moab

Mining Right Area; and• on redemption, the nominal value of the shares and a premium of up to R249.99 per share provided by the net proceeds from

disposal of the assets relating to the Moab Mining Right Area.

The Moab Mining Right Area consists of the Moab Khotsong mine operations.

The B preference shares will only be redeemed from any net proceeds remaining after the disposal of the Moab Mining Right Area following permanent cessation of mining activities. The maximum redemption price will be R250 per share.

In the event of any surplus remaining after the redemption in full of the B preference shares, the A preference shares will be redeemable at such value as would cover the outstanding surplus.


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26 Borrowings

Non-current

Unsecured

Debt carried at fair value

Mandatory convertible bonds – issued September 2010 (note 37) (1) 588 760

Quarterly coupons are paid at 6% per annum and the bonds are convertible into a variable number of shares ranging from 18,140,000 shares at a price equal to or less than $43.50 per share, to 14,511,937 shares at a price equal to or greater than $54.375 per share, each as calculated in accordance with the formula set forth in the bond agreement. The bonds are US dollar-based and are convertible into shares in September 2013.

The shareholders have authorised the convertible bonds to be settled in equity and do not have any cash settlement potential except if a fundamental change or conversion rate adjustment causes the number of shares deliverable upon conversion to exceed the number of shares reserved for such purpose, among other circumstances provided for in the bond agreement.

Debt carried at amortised cost

Rated bonds – issued July 2012 (2)

Semi-annual coupons are paid at 5.125% per annum. The bonds were issued on 30 July 2012, are repayable on 1 August 2022 and are US dollar-based.

753 –

Rated bonds – issued April 2010 (3)

Semi-annual coupons are paid at 5.375% per annum on $700m 10-year bonds and at 6.5% per annum on $300m 30-year bonds. The $700m bonds are repayable in April 2020 and the $300m bonds are repayable in April 2040. The bonds are US dollar-based.

996 996

3.5% Convertible bonds – issued May 2009 (4)

Semi-annual coupons are paid at 3.5% per annum. The bonds are convertible into ADSs up to May 2014 and are US dollar-based. The bonds are convertible, at the holders’ option, at an initial price of $47.6126 per ADS.

AngloGold Ashanti Limited may redeem the bonds by giving between 30 and 90 days notice to the bondholders at any time after 11 June 2012, if the price of the ADSs exceeds 130% of the conversion price for more than 20 consecutive dealing days, five days prior to notice or at any time if conversion rights have been exercised or purchases effected on 85% of the bonds issued.

685 652

Syndicated revolving credit facility (A$600m) (5)

Interest charged at BBSY plus 2% per annum. The applicable margin is subject to a ratings grid. Loan is repayable in December 2015 and is Australian dollar-based. The loan is subject to debt covenant arrangements for which no default event occurred.

261 –

Grupo Santander BrasilInterest charged at 8.11% per annum. Loans are repayable in monthly instalments terminating in November 2013 and April 2014 and are Brazilian real-based.

1 2

Brazilian Economic and Social Development BankInterest charged at a rate of 2.3% plus delta exchange rate on individual instalments per annum. Loans are repayable in monthly instalments terminating in April 2014 and are Brazilian real-based.

1 1

Banco de Desenvolvimento de Minas GeraisInterest charged at a rate of 4.5% per annum. Loans are repayable in monthly instalments terminating in June 2020 and are Brazilian real-based.

1 1


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26 Borrowings (continued)

Non-current (continued)

Secured

Finance leases

Turbine Square Two (Pty) LimitedThe leases are capitalised at an implied interest rate of 9.8% per annum. Lease payments are due in monthly instalments terminating in March 2022 and are SA rand-based. The buildings financed are used as security for these loans (note 37).

31 33

Caterpillar Financial Services CorporationInterest charged at an average rate of 5.46% per annum. Loans are repayable in monthly instalments terminating in January 2015 and are US dollar-based. The equipment financed is used as security for these loans.

8 10

Mazuma Capital CorporationInterest charged at an average rate of 5.6% per annum. Loans were repaid in monthly instalments and terminated in November 2012 and were US dollar-based. The equipment financed was used as security for these loans.

– 2

CSI Latina Arrendamento Mercantil S.A.Interest charged at a rate of 10.4% per annum. Loans are repayable by December 2015 and are Brazilian real-based. The equipment financed is used as security for these loans.

1 2

Navachab Lewcor Mining ContractInterest charged at a rate of 8.4% per annum. Loans are repayable by April 2015 and are Namibian dollar-based. The equipment financed is used as security for these loans.

22 29

California First National BankInterest charged at an average rate of 2.4% per annum. Loans are repayable in monthly instalments terminating in December 2019 and are US dollar-based. The equipment financed is used as security for these loans.

11 –

Total non-current borrowings including current portion 3,359 2,488

Current portion of non-current borrowings included in current liabilities (635) (32)

Total non-current borrowings 2,724 2,456

Current

Current portion of non-current borrowings included above 635 32

Unsecured

Senior floating rate notes – DMTNP 84 –

Senior fixed rate notes – DMTNP 36 –

FirstRand Bank Limited demand facility 59 –

Other loans 45 –

Total current borrowings 859 32

Total borrowings (notes 36 and 37) 3,583 2,488


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26 Borrowings (continued)Amounts falling due

Within one year 859 32

Between one and two years 699 773

Between two and five years 277 672

After five years 1,748 1,011

(notes 36 and 37) 3,583 2,488

Currency

The currencies in which the borrowings are denominated are as follows:

US dollar 3,086 2,420

Australian dollar 261 –

SA rand 210 33

Brazilian real 4 6

Namibian dollar 22 29

(notes 36 and 37) 3,583 2,488

Undrawn facilities

Undrawn borrowing facilities as at 31 December are as follows:

Syndicated revolving credit facility ($1bn) – US dollar 1,000 1,000

Syndicated revolving credit facility (A$600m) – Australian dollar 359 617

FirstRand Bank Limited – US dollar – 50

Absa Bank Limited – US dollar – 42

Nedbank Limited – US dollar – 2

FirstRand Bank Limited – SA rand 30 14

Standard Bank of South Africa Limited – SA rand – 23

Nedbank Limited – SA rand – 13

Absa Bank Limited – SA rand – 4

1,389 1,765

(1) Mandatory convertible bonds – issued September 2010

Senior unsecured fixed-rate bonds 586 758

Accrued interest 2 2

588 760

(2) Rated bonds – issued July 2012

Senior unsecured fixed-rate bonds 750 –

Unamortised discount and bond issue costs (13) –

737 –

Accrued interest 16 –

753 –

(3) Rated bonds – issued April 2010

Senior unsecured fixed-rate bonds 1,000 1,000

Unamortised discount and bond issue costs (15) (16)

985 984


996 996


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26 Borrowings (continued)(4) 3.5% Convertible bonds – issued May 2009

Senior unsecured fixed-rate bonds 733 733

Unamortised discount and bond issue costs (51) (84)

682 649


685 652

(5) Syndicated revolving credit facility (A$600m)

Drawn down 266 –

Unamortised loan issue costs (5) –

261 –

27 Environmental rehabilitation and other provisions

Environmental rehabilitation obligations

Provision for decommissioning


Change in estimates (1) 53 32


Unwinding of decommissioning obligation (note 7) 11 12



Provision for restoration


Charge to income statement 18 8

Change in estimates (1) (16) 180


Unwinding of restoration obligation (note 7) (2) 18 17

Utilised during the year (21) (18)



Other provisions


Charge to income statement 45 21

Change in estimates (2) –


Transfer to trade and other payables (4) (5)

Unwinding of other provisions (note 7) 1 –

Utilised during the year (10) (15)




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27 Environmental rehabilitation and other provisions (continued)

Other provisions comprise the following:– provision for labour, environmental, tax and civil court settlements (3) 32 34 – provision for employee compensation claims in Australasia (4) – 1 – commodity contract (5) 365 –

397 35

Total environmental rehabilitation and other provisions 1,238 782 (1) The change in estimates relates to changes in mine plans resulting in accelerated cash flows, changes in economic

assumptions and discount rates and changes in design of tailings storage facilities and in methodology following requests from the environmental regulatory authorities. These provisions are expected to unwind beyond the end of the life of mine.

(2) Included in unwinding of restoration obligation is $1m (2011: $2m) which is recoverable from a third party. The asset is included in trade and other receivables.

(3) Comprises claims filed by former employees in respect of loss of employment, work-related accident injuries and diseases, governmental fiscal claims relating to levies, surcharges and environmental legal disputes and shareholder claim related to stamp duties. The liability is expected to be settled over the next two-to five-year period.

(4) Comprises an estimate of potential workers compensation liability in Australasia based on claims with regard to work-related incidents. The liability is expected to be settled in the next three-to five-year period.

(5) Chemwes (Pty) Limited, a subsidiary of First Uranium (Pty) Limited acquired by AngloGold Ashanti Limited during 2012, agreed to sell 25% of its production, capped at 312,500oz from 1 January 2012, to Franco-Nevada (Barbados) Corporation. Franco Nevada is required to pay $400/oz which inflates at 1% compounded annually from 2013. These factors were considered in determining the commodity contract obligation. The provision is calculated as the present value of the portion which is deemed onerous in light of the current market conditions. As at 31 December 2012, the remaining production due to Franco Nevada is 292,672oz. Also included are future royalty obligations to Buffelsfontein Gold Mines and Premier Royalty Company of $24m and environmental legal claims of $3m.


28 Provision for pension and post-retirement benefitsDefined benefit plans

The group has made provision for pension, provident and medical schemes covering substantially all employees. The retirement schemes consist of the following:

AngloGold Ashanti Limited Pension Fund 24 23

Post-retirement medical scheme for AngloGold Ashanti Limited South African employees 183 157

Other defined benefit plans (1) 14 12

Sub-total 221 192

Transferred to other non-current assets (note 20):

– Post-retirement medical scheme for Rand Refinery employees – 2

– Ashanti Retired Staff Pension Plan – 1

221 195

(1) Other defined benefit plans comprise the following:

– Ashanti Retired Staff Pension Plan (asset) – (1)

– Obuasi Mines Staff Pension Scheme 11 11

– Post-retirement medical scheme for Rand Refinery employees (asset) – (2)

– Retiree Medical Plan for North American employees 2 3

– Supplemental Employee Retirement Plan (SERP) for North America (USA) Inc. employees

1 1

14 12


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28 Provision for pension and post-retirement benefits (continued)

AngloGold Ashanti Limited Pension Fund

The plan is evaluated by independent actuaries on an annual basis as at 31 December of each year. The valuation as at 31 December 2012 was completed at the beginning of 2013 using the projected unit credit method. In arriving at their conclusions, the actuaries took into account reasonable long-term estimates of inflation, increases in wages, salaries and pensions, as well as returns on investments.

A formal statutory valuation is required by legislation every three years. The statutory valuation effective 31 December 2011 was completed in May 2012. The next statutory valuation of the Fund will have an effective date of no later than 31 December 2014 and is expected to be submitted to the Registrar of Pension Funds during 2015.

All South African pension funds are governed by the Pension Funds Act of 1956 as amended.

Information with respect to the AngloGold Ashanti Limited Pension Fund is as follows:

Benefit obligation


Current service cost 7 7

Interest cost 26 25

Participants’ contributions 1 2

Actuarial loss 22 22

Benefits paid (18) (19)



Plan assets


Expected return on plan assets 31 30

Actuarial gain (loss) 14 (6)

Company contributions 7 7

Participants’ contributions 1 2



Fair value of plan assets at end of year 304 284

Unfunded status at end of year (24) (23)

Net amount recognised (24) (23)


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AngloGold Ashanti Limited Pension Fund (continued)

Information with respect to the AngloGold Ashanti Limited Pension Fund is as follows: (continued)

Components of net periodic benefit cost

Interest cost 26 25


Expected return on assets (31) (30)

Net periodic benefit cost 2 2

Assumptions

Assumptions used to determine benefit obligations at the end of the year are as follows:

Discount rate 8.25% 8.75%

Rate of compensation increase (1) 8.00% 8.00%

Expected long-term return on plan assets (2) 10.53% 11.20%

Pension increase 5.40% 5.40%

Plan assets

AngloGold Ashanti Limited’s pension plan asset allocations at the end of the year, by asset category, are as follows:

Equity securities 56% 56%

Debt securities 38% 37%

Other 6% 7%

100% 100%

(1) The short-term compensation rate increase is 5.5% (2011: 7.5%) and the long-term compensation rate increase is 8.0% (2011: 8.0%).

(2) The expected long-term return on plan assets is determined using the after tax yields of the various asset classes as a guide.

Investment policy

The Trustees have adopted a long-term horizon in formulating the Fund’s investment strategy, which is consistent with the term of the Fund’s liabilities. The investment strategy aims to provide a reasonable return relative to inflation across a range of market conditions.

The Trustees have adopted different strategic asset allocations for the assets backing pensioner and active member liabilities. The strategic asset allocation defines what proportion of the Fund’s assets should be invested in each major asset class. The Trustees have then selected specialist investment managers to manage the assets in each asset class according to specific performance mandates instituted by the Trustees.

The Trustees have also put in place a detailed Statement of Investment Principles that sets out the Fund’s overall investment philosophy and strategy.


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AngloGold Ashanti Limited Pension Fund (continued)

Investment policy (continued)

Fund returns are calculated on a monthly basis, and the performance of the managers and Fund as a whole is formally reviewed by the Fund’s Investment Sub-Committee at least every six months.

Numberof shares

Percentageof totalassets

Fair value(US dollars

million)Number

of shares

Percentageof totalassets

Fair value(US dollars

million)

2012 2011

Related parties

Investments held in related parties are summarised as follows:

Equity securities

AngloGold Ashanti Limited 184,432 1.9% 6 100,079 1.5% 4

Other investments exceeding 5% of total plan assets

Bonds

IFM Corporate Bond Unit Trust 271,680,384 11.4% 35 287,226,346 12.7% 36

Allan Gray Orbis Global Equity Fund 224,509 9.5% 29 242,110 9.5% 27

Contrarius Global Equity Fund 1,151,413 9.2% 28 1,251,535 9.1% 26

92 89

Cash flows

Contributions

AngloGold Ashanti Limited expects to contribute $5m (2012: $5m) to its pension plan in 2013.

Figures in million (US dollars) 2012

Estimated future benefit payments

The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:

2013 19

2014 20

2015 20

2016 21

2017 21

Thereafter 227


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Post-retirement medical scheme for AngloGold Ashanti Limited South African employees

The provision for post-retirement medical funding represents the provision for health care benefits for employees and retired employees and their registered dependants.

The post-retirement benefit costs are assessed in accordance with the advice of independent professionally qualified actuaries. The actuarial method used is the projected unit credit funding method. This scheme is unfunded. The last valuation was performed as at 31 December 2012.

Information with respect to the defined benefit liability is as follows:

Benefit obligation



Recognition of past service cost 22 –

Interest cost 13 13


Actuarial loss 13 11



Unfunded status at end of year (183) (157)

Net amount recognised (183) (157)



Interest cost 13 13

Recognition of past service cost 22 –

Net periodic benefit cost 36 14

Assumptions

Assumptions used to determine benefit obligations at the end of the year are as follows:

Discount rate 7.75% 8.75%

Expected increase in health care costs 7.00% 7.50%

Assumed health care cost trend rates at 31 December:

Health care cost trend assumed for next year 7.00% 7.50%

Rate to which the cost trend is assumed to decline (the ultimate trend rate) 7.00% 7.50%

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A 1% point change in assumed health care cost trend rates would have the following effect:

1% point increase

Effect on total service and interest cost 1

Effect on post-retirement benefit obligation 5

1% point decrease

Effect on total service and interest cost (1)

Effect on post-retirement benefit obligation (16)


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Post-retirement medical scheme for AngloGold Ashanti Limited South African employees (continued)

Cash flows

Contributions

AngloGold Ashanti Limited expects to contribute $12m (2012: $12m) to the post-retirement medical plan in 2013.


The following medical benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:

2013 12

2014 13

2015 14

2016 15

2017 15

Thereafter 114

Other defined benefit plans

Other defined benefit plans include the Ashanti Retired Staff Pension Plan, the Obuasi Mines Staff Pension Scheme, the Post-retirement medical scheme for Rand Refinery employees, the Retiree Medical Plan for North American employees, the Supplemental Employee Retirement Plan for North America (USA) Inc. employees and the Retiree Medical Plan for Nufcor South Africa employees.

Information in respect of other defined benefit plans for the year ended 31 December 2012 has been aggregated in the tables of change in benefit obligations, change in plan assets and components of net periodic benefit cost and is as follows:

Benefit obligation


Interest cost 1 1

Actuarial loss 1 –

Disposal of subsidiary (note 33) (2) –


Translation (1) –


Plan assets

Fair value of plan assets at beginning of year 9 10

Expected return on plan assets – 1


Translation (1) (2)

Fair value of plan assets at end of year 4 9


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Other defined benefit plans (continued)

Information in respect of other defined benefit plans is as follows: (continued)

Net amount recognised analysed as follows: (14) (12)– funded plans – 2 – unfunded plans (14) (14)


Interest cost 1 1

Expected return on plan assets – (1)

Net periodic benefit cost 1 –

Cash flows

The other retirement defined benefit plans are all closed to new members and current members are either retired or deferred members. The companies do not make contributions to these plans.


The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:

2013 2

2014 1

2015 1

2016 1

2017 1

Thereafter 12

Five-year defined benefit plan disclosure

Figures in million (US dollars) 2012 2011 2010 2009 2008

AngloGold Ashanti Limited Pension Fund

Defined benefit obligation 328 307 334 269 199 Plan assets (304) (284) (334) (274) (188)Net unfunded (funded) 24 23 – (5) 11 Experience adjustments on plan liabilities (1) 4 – 3 17 Experience adjustments on plan assets (14) 7 (11) (12) 33 Post-retirement medical scheme for AngloGold Ashanti Limited South African employees Defined benefit obligation 183 157 176 147 113 Unfunded 183 157 176 147 113 Experience adjustments on plan liabilities 2 5 1 16 6

Other defined benefit plansDefined benefit obligation 18 21 22 18 17 Plan assets (4) (9) (10) (8) (6)Unfunded 14 12 12 10 11 Experience adjustments on plan liabilities 1 1 5 – 1 Experience adjustments on plan assets – – – – 1


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Defined contribution funds

Contributions to the various retirement schemes are fully expensed during the year in which they are made and the cost of contributing to retirement benefits for the year amounted to $69m (2011: $64m).

South Africa

AngloGold Ashanti Limited’s operations in South Africa (Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka, TauTona, First Uranium SA, Corporate and Other) contribute to various industry-based pension and provident retirement plans which cover substantially all employees and are defined contribution plans. These plans are all funded and the assets of the schemes are held in administrated funds separately from the group’s assets. The cost of providing these benefits amounted to $46m (2011: $48m).

Continental Africa

AngloGold Ashanti Limited’s mines in Ghana (Iduapriem and Obuasi) contribute to provident plans for their employees which are defined contribution plans. The funds are administered by Boards of Trustees and invest mainly in Ghana government treasury instruments, fixed term deposits and other investments. The cost of these contributions was $10m (2011: $3m).

AngloGold Ashanti Limited’s mine in Guinea (Siguiri) contributes to a provident plan for their employees which is a defined contribution plan. The funds are administered by Boards of Trustees and invest mainly in Guinea government treasury instruments, fixed term deposits and other investments. The cost of these contributions was $2m (2011: $2m).

At AngloGold Ashanti Limited’s mine in Namibia (Navachab) the employees are members of a defined contribution provident fund. The fund is administered by the Old Mutual Life Assurance Company (Namibia) Limited. Both the company and the employees contribute to this fund. The cost to the group of all these contributions amounted to $2m (2011: $2m).

AngloGold Ashanti Limited’s mine in Tanzania (Geita) does not have a retirement scheme for employees. Tanzanian nationals contribute to the National Social Security Fund (NSSF) or the Parastatal Provident Fund (PPF), depending on the employee’s choice, and the company also makes a contribution on the employee’s behalf to the same fund. On leaving the group, employees may withdraw their contribution from the fund. From July 2005, the company has set up a supplemental provident fund which is administered by the PPF with membership available to permanent national employees on a voluntary basis. The company makes no contribution towards any retirement schemes for contracted expatriate employees. The company contributes to the NSSF on behalf of expatriate employees. On termination of employment the company may apply for a refund of contributions from the NSSF. The NSSF also administers this fund.

Australasia

AngloGold Ashanti Limited’s mines in Australia (Sunrise Dam and Tropicana) contribute to various approved superannuation funds for the provision of benefits to employees and their dependants on retirement, disability or death. The fund is a multi-industry national fund with defined contribution arrangements. Contribution rates by the operation on behalf of employees varies, with minimum contributions meeting compliance requirements under the Superannuation Guarantee legislation. The contributions by the operations are legally enforceable to the extent required by the Superannuation Guarantee legislation and relevant employment agreements. The cost to the group of all these contributions amounted to $6m (2011: $5m).

Americas

AngloGold Ashanti Limited’s mine in North America (Cripple Creek & Victor) sponsors a 401(k) savings plan whereby employees may contribute up to 60% of their salary, of which up to 5% is matched at a rate of 150% by AngloGold Ashanti Limited USA. AngloGold Ashanti Limited USA’s contributions were $2m (2011: $2m).

AngloGold Ashanti Limited’s mines in Brazil (AngloGold Ashanti Córrego do Sitío Mineração and Serra Grande) operate defined contribution arrangements for their employees. These arrangements are funded by the operations (basic plan) and operations/employees (optional supplementary plan). A PGBL (Plano Gerador de Beneficio Livre) fund, similar to the American 401(k) type of plan was started in December 2001. Administered by Bradesco Previdência e Seguros (which assumes the risk for any eventual actuarial liabilities), this is the only private pension plan sponsored by the group. Contributions amounted to $1m (2011: $2m).




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Defined contribution funds (continued)

Americas (continued)

AngloGold Ashanti Limited’s mine in Argentina (Cerro Vanguardia) does not have a retirement scheme for employees. Argentine nationals contribute to the obligatory Régimen Previsional Público fund which is administered by the state through the National Administrators of the Social Security (ANSES). Employees in Argentina contribute 11% of their salaries towards the Régimen Previsional Público fund and the company makes a contribution of 17% of an employee’s salary to the same fund.

AngloGold Ashanti Limited’s operations in Colombia offer an optional defined contribution plan to their employees. The employees can contribute up to 10% of their salary and the company contributes 50% of this amount. On termination of employment the participant may apply to withdraw from the fund.


29 Deferred taxation

Deferred taxation relating to temporary differences is made up as follows:

Liabilities

Tangible assets 1,530 1,540

Inventories 63 18

Derivatives 2 8

Other 15 4

1,610 1,570

Assets

Provisions 511 406

Derivatives 1 1

Tax losses 109 82

Other 17 2

638 491

Net deferred taxation liability 972 1,079

Included in the statement of financial position as follows:

Deferred tax assets 96 79

Deferred tax liabilities 1,068 1,158

Net deferred taxation liability 972 1,079

The movement on the deferred tax balance is as follows:

Balance at beginning of year 1,079 880

Income statement movement (91) 316

Taxation on items included in other comprehensive income (2) (6)




Balance at end of year 972 1,079

Provision has been made for South African income tax or foreign taxes that may result from future remittances of undistributed earnings of foreign subsidiaries or foreign corporate joint ventures, where the group is able to assert that the undistributed earnings are not permanently reinvested. In all other cases, the foreign subsidiaries reinvest the undistributed earnings into future capital expansion projects, maintenance capital and ongoing working capital funding requirements. Unrecognised taxable temporary differences pertaining to undistributed earnings totalled $462m (2011: $554m).


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30 Trade, other payables and deferred incomeNon-current

Accruals 9 9

Deferred income 1 3

Other payables – 2

10 14

Current

Trade payables 590 473

Accruals 325 257

Deferred income 3 6

Other payables 61 15

979 751

Total trade, other payables and deferred income 989 765

Current trade and other payables are non-interest bearing and are normally settled within 60 days.

31 Taxation


Refunds during the year 54 98

Payments during the year (507) (477)

Provision during the year 413 407




Included in the statement of financial position as follows:

Taxation asset included in trade and other receivables 52 35

Taxation liability 117 155

65 120




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32 Cash generated from operations

Profit before taxation 1,171 2,321

Adjusted for:

Movement on non-hedge derivatives and other commodity contracts (note 36) 35 1

Amortisation of tangible assets (notes 4, 9 and 15) 793 768

Finance costs and unwinding of obligations (note 7) 231 196

Environmental, rehabilitation and other expenditure (17) 171

Special items 402 (93)

Amortisation of intangible assets (notes 4 and 16) 5 2

Deferred stripping (24) 19

Fair value adjustment on option component of convertible bonds (83) (84)

Fair value adjustment on mandatory convertible bonds (162) (104)

Interest received (note 3) (43) (52)

Share of equity-accounted investments’ loss (profit) (note 8) 28 (73)

Other non-cash movements 65 21

Movements in working capital (218) (170)

2,183 2,923

Movements in working capital:

Increase in inventories (324) (236)

Increase in trade and other receivables (110) –

Increase in trade and other payables 216 66

(218) (170)


33 Business combinationsAcquisition of First Uranium (Pty) Limited

On 20 July 2012, AngloGold Ashanti Limited acquired the entire share capital of First Uranium (Pty) Limited, a wholly owned subsidiary of Toronto-based First Uranium Corporation and the owner of Mine Waste Solutions, a recently commissioned tailings retreatment operation located in South Africa’s Vaal River region and in the immediate proximity of AngloGold Ashanti’s own tailings facilities, for an aggregate cash consideration of $335m. The transaction was funded from cash reserves and debt facilities. The acquisition has been accounted for using the acquisition method.

The fair value of the identifiable assets and liabilities of First Uranium (Pty) Limited as at the date of acquisition was:

Assets

Tangible assets (note 15) 616

Other investments (note 18) 3

Deferred tax (note 29) 52

Inventories 134

Trade and other receivables 2

Cash restricted for use 3

Cash and cash equivalents 5

815


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NTS Figures in million (US dollars) 2012

33 Business combinations (continued)Liabilities

Environmental rehabilitation and other provisions (note 27) 386

Loans from group companies 204


Trade and other payables 48

698

Total identifiable net assets at fair value 117

Purchase consideration 131

Goodwill recognised on acquisition (note 16) 14

Analysis of cash flows on acquisition:

Net cash acquired with the subsidiary 5

Cash paid – share capital acquired (131)

Cash paid – loan acquired (204)

(330)

Since acquisition, First Uranium (Pty) Limited has contributed $41m of revenue and a profit of less than $1m to the net profit before tax of the group. If the combination had taken place at the beginning of the year, applying the group accounting policies, the group’s profit for the year would have been $854m and revenue would have been $6,697m.

The transaction costs of $3m have been expensed and are included in administrative expenses in the income statement and are part of operating activities in the statement of cash flows.

The goodwill of $14m arising from the acquisition consists largely of the expected synergies arising from the immediate proximity of AngloGold Ashanti Limited’s own tailings facilities to the Mine Waste Solutions plant that will allow processing of AngloGold Ashanti Limited’s Vaal River tailings without having to build additional processing facilities. The processing of AngloGold Ashanti Limited’s tailings will reduce the environmental liability associated with those tailings. In addition, the company is able to utilise its recently developed processes and recovery technology for tailings which will increase the ore recovery rates from both AngloGold Ashanti Limited and First Uranium (Pty) Limited tailings alike.

None of the goodwill recognised is expected to be deductible for income tax purposes. There have been no significant movements in goodwill or provisions except for the fair value movements related to the commodity contract since the date of acquisition.

Financial assets acquired includes trade and other receivables with a fair value of $2m. All trade and other receivables are expected to be collectible.




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33 Business combinations (continued)Part disposal of Rand Refinery Limited

In early December 2012, AngloGold Ashanti Limited disposed of a 5% interest in Rand Refinery Limited (Rand Refinery) for a total cash consideration of $6m. At year-end AngloGold Ashanti Limited held a remaining interest of 48.03% and this interest was accounted for as an associate.

The carrying value of the identifiable assets and liabilities of Rand Refinery as at the date of disposal was:

Assets

Tangible assets (note 15) 53

Other non-current assets (note 28) 2

Non-current assets held for sale 1

Inventories 22

Trade and other receivables 13

Cash and cash equivalents 31

122

Liabilities


Trade and other payables 22

Taxation (note 31) 4

28

Total identifiable net assets 94

Consideration received 6

Fair value of residual value of investment (note 17) 57

Non-controlling interest 45

Less: net assets disposed (94)

Total gain on disposal 14

Total gain on disposal 14

Realised gain 5

Unrealised gain 9


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34 Related parties Material related party transactions were as follows (not attributable):

Sales and services rendered to related parties

Joint ventures 18 18

Purchases and services acquired from related parties

Associates 4 6

Outstanding balances arising from the sale of goods and services due by related parties

Joint ventures 2 3 Amounts owed to/due by related parties above are unsecured and non-interest bearing.

Loans advanced to associates

Oro Group (Pty) Limited 2 1 The loan bears a market related interest rate determined by the Oro Group (Pty) Limited’s board of directors and is repayable at its discretion.

Trans-Siberian Gold plc – 3

The loan was unsecured, carried interest at 8% per annum and was converted into ordinary shares during 2012.

Loans advanced to joint venturesSociété d’Exploitation des Mines d’Or de Sadiola S.A. 36 – The loan is repayable on demand and bears interest at LIBOR plus 2% per annum.

Société d’Exploitation des Mines d’Or de Yatela S.A. – –A loan of $12m (2011: nil) is repayable on demand and bears interest at LIBOR plus 2% per annum. The loan was fully impaired during 2012.

AuruMar (Pty) Limited 2 5 The loan is interest free and has no fixed terms of repayment.

Thani Ashanti Alliance Limited – 20 The loan bears interest at JIBAR plus 0.95% per annum. The loan was fully impaired during 2012.

Loans advanced to associates and joint ventures are included in the carrying value of investments in equity-accounted associates and joint ventures (note 17).

Details of guarantees to related parties are included in note 35.

Directors and other key management personnel

Details relating to directors’ and prescribed officers’ emoluments and shareholdings in the company are disclosed in the Remuneration and Directors’ reports.

Compensation to directors and other key management personnel includes the following:

– short-term employee benefits 17 20

– post-employment benefits 2 1

– share-based payments 9 3

28 24




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35 Contractual commitments and contingencies

Operating leases

At 31 December 2012, the group was committed to making the following payments in respect of operating leases for, amongst others, the hire of plant and equipment and land and buildings. Certain contracts contain renewal options and escalation clauses for various periods of time.

Expiry:

– within one year 22 23

– between one and two years 3 1

– between two and five years 4 1

– after five years 3 –

32 25

Finance leases

The group has finance leases for plant and equipment and buildings. The leases for plant and equipment and buildings have terms of renewal but no purchase options. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments are as follows:

Minimumpayments

Presentvalue of

paymentsMinimum

payments

Presentvalue of

payments


Within one year 20 15 20 14

After one year but not more than five years 44 32 50 35

More than five years 32 26 35 27

Total minimum lease payments 96 73 105 76

Amounts representing finance charges (23) – (29) –

Present value of minimum lease payments 73 73 76 76


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NTS 35 Contractual commitments and contingencies (continued)


Capital commitments

Acquisition of tangible assets

Contracted for 1,075 202

Not contracted for 2,242 1,128

Authorised by the directors 3,317 1,330

Allocated to:

Project capital

– within one year 1,092 832

– thereafter 1,708 46

2,800 878

Stay-in-business capital– within one year 517 421 – thereafter – 31

517 452

Share of underlying capital commitments of joint ventures included above 749 14

Purchase obligationsContracted for– within one year 643 334 – thereafter 102 129

745 463

Purchase obligations represent contractual obligations for the purchase of mining contract services, power, supplies, consumables, inventories, explosives and activated carbon.

To service these capital commitments, purchase obligations and other operational requirements, the group is dependent on existing cash resources, cash generated from operations and borrowing facilities.

Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject to foreign investment, exchange control laws and regulations, and the quantity of foreign exchange available in offshore countries. In addition, distributions from joint ventures are subject to the relevant board approval.

The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent that external borrowings are required, the group’s covenant performance indicates that existing financing facilities will be available to meet the commitments detailed above. To the extent that any of the financing facilities mature in the near future, the group believes that sufficient measures are in place to ensure that these facilities can be refinanced.




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35 Contractual commitments and contingencies (continued)

Contingencies

Guarantees and

contingencies

Liabilities included in

the statement of financial

position

Guarantees and

contingencies

Liabilities included in

the statement of financial

position


Contingent liabilities

Groundwater pollution (1) – – – –

Deep groundwater pollution – South Africa (2) – – – –

Indirect taxes – Ghana (3) 23 – 12 –

Occupational Diseases in Mines and Works Act (ODMWA) litigation (4) – – – –

Other tax disputes – AngloGold Ashanti Brasil Mineração Ltda (5) 38 – 29 –

Sales tax on gold deliveries – Mineração Serra Grande S.A. (6) 156 – 88 –

Other tax disputes – Mineração Serra Grande S.A. (7) 19 – 9 –

Tax dispute – AngloGold Ashanti Colombia S.A. (8) 161 – – –

Contingent assets

Indemnity – Kinross Gold Corporation (9) (90) –

Royalty – Boddington Gold Mine (10) – –

Royalty – Tau Lekoa Gold Mine (11) – –

Guarantees

Financial guarantees

Oro Group (Pty) Limited (12) 12 – 12 –

Hedging guarantees

AngloGold South America (13) – – – –

AngloGold USA Trading Company (13) – – – –

Cerro Vanguardia S.A. (13) – – – –

319 – 150 –


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NTS 35 Contractual commitments and contingencies (continued)

Contingent liabilities(1) Groundwater pollution – AngloGold Ashanti Limited has identified groundwater contamination plumes at certain of its

operations, which have occurred primarily as a result of seepage. Numerous scientific, technical and legal studies have been undertaken to assist in determining the extent of the contamination and to find sustainable remediation solutions. The group has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvements in some instances. Furthermore, literature reviews, field trials and base line modelling techniques suggest, but have not yet proven, that the use of phyto-technologies can address the soil and groundwater contamination. Subject to the completion of trials and the technology being a proven remediation technique, no reliable estimate can be made for the obligation.

(2) Deep groundwater pollution – The company has identified a flooding and future pollution risk posed by deep groundwater in certain underground mines in Africa. Various studies have been undertaken by AngloGold Ashanti Limited since 1999. Due to the interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines located in these gold fields. As a result, in South Africa, the Department of Mineral Resources and affected mining companies are now involved in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation.

(3) Indirect taxes – AngloGold Ashanti (Ghana) Limited received a tax assessment for the 2006 to 2008 and for the 2009 to 2011 tax years following audits by the tax authorities which related to various indirect taxes amounting to $23m (2011: $12m). Management is of the opinion that the indirect taxes were not properly assessed and the company has lodged an objection.

(4) Occupational Diseases in Mines and Works Act (ODMWA) litigation – On 3 March 2011, in Mankayi vs. AngloGold Ashanti, the Constitutional Court of South Africa held that section 35(1) of the Compensation for Occupational Injuries and Diseases Act, 1993 does not cover an “employee” who qualifies for compensation in respect of “compensable diseases” under the Occupational Diseases in Mines and Works Act, 1973 (ODMWA). This judgement allows such qualifying employee to pursue a civil claim for damages against the employer. Following the Constitutional Court decision, AngloGold Ashanti has become subject to numerous claims relating to silicosis and other Occupational Lung Diseases (OLD), including several potential class actions and individual claims.

For example, on or about 21 August 2012, AngloGold Ashanti was served with an application instituted by Bangumzi Bennet Balakazi and others in which the applicants seek an order declaring that all mine workers (former or current) who previously worked or continue to work in specified South African gold mines for the period owned by AngloGold Ashanti and who have silicosis or other OLD constitute members of a class for the purpose of proceedings for declaratory relief and claims for damages. In the event the class is certified, such class of workers would be permitted to institute actions by way of a summons against AngloGold Ashanti for amounts as yet unspecified. On 4 September 2012, AngloGold Ashanti delivered its notice of intention to defend this application. AngloGold Ashanti has also delivered a formal request for additional information that it requires to prepare its affidavits in respect to the allegations and the request for certification of a class.

In addition, on or about 8 January 2013, AngloGold Ashanti and its subsidiary Free State Consolidated Gold Mines (Operations) Limited, alongside other mining companies operating in South Africa, were served with another application to certify a class. The applicants in the case seek to have the court certify two classes namely: (i) current and former mineworkers who have silicosis (whether or not accompanied by any other disease) and who work or have worked on certain specified gold mines at any time from 1 January 1965 to date; and (ii) the dependants of mineworkers who died as a result of silicosis (whether or not accompanied by any other disease) and who worked on these gold mines at any time after 1 January 1965. AngloGold Ashanti has filed a notice of intention to oppose the application.

In October 2012, a further 31 individual summonses and particulars of claim have been received relating to silicosis and/or other OLD. The total amount being claimed in the 31 summonses is approximately $9m. On 22 October 2012, AngloGold Ashanti filed a notice of intention to oppose these claims. AngloGold Ashanti has also served a notice of exception to the summonses which, if successful, is expected to require the plaintiffs to redraft the particulars of claim to correct certain errors.

It is possible that additional class actions and/or individual claims relating to silicosis and/or other OLD will be filed against AngloGold Ashanti in the future. AngloGold Ashanti will defend all current and subsequently filed claims on their merits. Should AngloGold Ashanti be unsuccessful in defending any such claims, or in otherwise favourably resolving perceived deficiencies in the national occupational disease compensation framework that were identified in the earlier decision by the Constitutional Court, such matters would have an adverse effect on its financial position, which could be material. The company is unable to estimate its share of the amounts claimed.




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35 Contractual commitments and contingencies (continued)

Contingent liabilities (continued)(5) Other tax disputes – In November 2007, the Departamento Nacional de Produção Mineral (DNPM), a Brazilian federal

mining authority, issued a tax assessment against AngloGold Ashanti Brazil Mineração (AABM) in the amount of $21m (2011: $21m) relating to the calculation and payment by AABM of the financial contribution on mining exploitation (CFEM) in the period from 1991 to 2006. AngloGold Ashanti Limited’s subsidiaries in Brazil are involved in various other disputes with tax authorities. These disputes involve federal tax assessments including income tax, royalties, social contributions and annual property tax. The amount involved is approximately $17m (2011: $8m). Management is of the opinion that these taxes are not payable.

(6) Sales taxes on gold deliveries – In 2006, Mineração Serra Grande S.A. (MSG), received two tax assessments from the State of Goiás related to payments of state sales taxes at the rate of 12% on gold deliveries for export from one Brazilian state to another during the period from February 2004 to the end of May 2006. The first and second assessments are approximately $96m (2011: attributable share $54m) and $60m (2011: attributable share $34m) respectively. In November 2006, the administrative council’s second chamber ruled in favour of MSG and fully cancelled the tax liability related to the first period. In July 2011, the administrative council’s second chamber ruled in favour of MSG and fully cancelled the tax liability related to the second period. The State of Goiás has appealed to the full board of the State of Goiás tax administrative council. In November 2011 (first case), and June 2012 (second case), the administrative council’s full board approved the suspension of proceedings and the remittance of the matter to the Department of Supervision of Foreign Trade (COMEX) for review and verification. Both cases have been remitted to the COMEX and are under review. The company believes both assessments are in violation of federal legislation on sales taxes. A date has not been set for a hearing before the COMEX.

(7) Other tax disputes – MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold. The tax administrators rejected the company’s appeal against the assessment. The company is now appealing the dismissal of the case. The assessment is approximately $19m (2011: attributable share $9m).

(8) Tax dispute – AngloGold Ashanti Colombia S.A. (AGAC) received notice from the Colombian Tax Office (DIAN) that it disagreed with the company’s tax treatment of certain items in the 2011 and 2010 income tax returns. The company believes that the tax legislation has been correctly applied. The company is considering defending AGAC’s position. An estimated additional tax of $26m will be payable if the tax returns are amended. Penalties and interest for the additional tax are expected to be $135m, based on Colombian tax law.

Contingent assets

(9) Indemnity – As part of the acquisition by AngloGold Ashanti Limited of the remaining 50% interest in MSG during June 2012, Kinross Gold Corporation (Kinross) has provided an indemnity to a maximum amount of BRL255m ($90m at 31 December 2012 exchange rates) against the specific exposures discussed in items 6 and 7 above.

(10) Royalty – As a result of the sale of the interest in the Boddington Gold Mine joint venture during 2009, the group is entitled to receive a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington Gold Mine’s total cash cost plus $600/oz. The royalty commenced on 1 July 2010 and is capped at a total amount of $100m, of which $60m has been received to date. Royalties of $18m (2011: $38m) were recorded during the year.

(11) Royalty – As a result of the sale of the interest in the Tau Lekoa Gold Mine during 2010, the group is entitled to receive a royalty on the production of a total of 1.5Moz by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of gold exceeds R180,000/kg (subject to inflation adjustment). Where the average monthly rand price of gold does not exceed R180,000/kg (subject to inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5Moz upon which the royalty is payable. The royalty will be determined at 3% of the net revenue (being gross revenue less State royalties) generated by the Tau Lekoa assets. Royalties on 304,643oz produced have been received to date. Royalties of $5m (2011: $5m) were received during the year.

Guarantees

(12) Provision of surety – The company has provided sureties in favour of a lender on a gold loan facility with its affiliate Oro Group (Pty) Limited and one of its subsidiaries to a maximum value of $12m (2011: $12m). The suretyship agreements have a termination notice period of 90 days.

(13) The group has issued gold delivery guarantees to several counterparty banks in which it guarantees the due performance of its subsidiaries AngloGold USA Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements. As at 31 December 2012 and 2011, the group had no open gold hedge contracts.


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NTS 36 Financial risk management activities

In the normal course of its operations, the group is exposed to gold price, other commodity price, foreign exchange, interest rate, liquidity, equity price and credit risks. In order to manage these risks, the group may enter into transactions which make use of both on- and off-balance sheet derivatives. The group does not acquire, hold or issue derivatives for speculative purposes. The group has developed a comprehensive risk management process to facilitate, control and monitor these risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterparty limits and controlling and reporting structures.

Managing risk in the group

Risk management activities within the group are the ultimate responsibility of the board of directors. The chief executive officer is responsible to the board of directors for the design, implementation and monitoring of the risk management plan. The Risk and Information Integrity Committee is responsible for overseeing risk management plans and systems, and the Audit and Corporate Governance Committee oversees financial risks which include a review of treasury activities and the group’s counterparties.

The financial risk management objectives of the group are defined as follows:• safeguarding the group’s core earnings stream from its major assets through the effective control and management of gold

price risk, other commodity risk, foreign exchange risk and interest rate risk;• effective and efficient usage of credit facilities in both the short and long-term through the adoption of reliable liquidity

management planning and procedures;• ensuring that investment and hedging transactions are undertaken with creditworthy counterparties; and• ensuring that all contracts and agreements related to risk management activities are co-ordinated, consistent throughout the

group and that they comply where necessary with all relevant regulatory and statutory requirements.

Gold price and foreign exchange risk

Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The group has transactional foreign exchange exposures, which arise from sales or purchases by an operating unit in currencies other than the unit’s functional currency. The gold market is predominately priced in US dollars which exposes the group to the risk that fluctuations in the SA rand/US dollar, Brazilian real/US dollar, Argentinean peso/US dollar and Australian dollar/US dollar exchange rates may also have an adverse effect on current or future earnings. The group is also exposed to certain by-product commodity price risk.

Cash flow hedges

The group’s cash flow hedges consist of a foreign exchange forward contract that is used to protect against exposures to variability in future foreign exchange and capital expenditure cash flows. The amounts and timing of future cash flows are projected for each portfolio of financial assets and liabilities on the basis of their contractual terms and other relevant factors, including estimates of prepayments and defaults. The contractual cash flows across all portfolios over time form the basis for identifying gains and losses on the effective portions of derivatives designated as cash flow hedges of forecast transactions. Gains and losses are initially recognised directly in other comprehensive income and reclassified to earnings as an adjustment to depreciation expense pertaining to capital expenditure, when the forecast transactions affect the income statement.

The group does not have any cash flow hedge contracts relating to product sales as at 31 December 2012. Cash flow hedge losses pertaining to capital expenditure of $3m as at 31 December 2012 (2011: $3m) are expected to be reclassified from accumulated other comprehensive income and recognised as an adjustment to depreciation expense until 2019.

The gains and losses on ineffective portions of such derivatives are recognised in the income statement. During the years 31 December 2012 and 2011, no gains or losses were recognised on non-hedge derivatives and other commodity contracts in the income statement due to hedge ineffectiveness.




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36 Financial risk management activities (continued)

Non-hedge derivatives

Loss on non-hedge derivatives and other commodity contracts is summarised as follows:

Loss on unrealised non-hedge derivatives and other commodity contracts (35) (1)

Loss on non-hedge derivatives and other commodity contracts per the income statement (note 32) (35) (1)

The loss on non-hedge derivatives and other commodity contracts was $35m (2011: $1m). This is mainly as a result of normal revaluation of commodity contracts resulting from changes in the prevailing forward gold price, exchange rates, interest rates and volatilities.

Net open hedge position as at 31 December 2012

The group had no outstanding commitments against future production potentially settled in cash.

Interest rate and liquidity risk

Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risk.

In the ordinary course of business, the group receives cash from the proceeds of its gold sales and is required to fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market-related returns while minimising risks. The group is able to actively source financing at competitive rates. The counterparties are financial and banking institutions and their credit ratings are regularly monitored.

The group has sufficient undrawn borrowing facilities available to fund working capital requirements (notes 26 and 37).

The following are the contractual maturities of financial liabilities, including interest payments


Within one yearBetween oneand two years

Between twoand five years

Afterfive years

2012

millionEffectiverate % million

Effectiverate % million


Effectiverate %

Totalmillion

Derivatives – – – 1 1

Financial guarantees (1) 12 – – – 12

Trade and other payables 949 – – – 949

Borrowings 1,008 876 585 2,477 4,946

– In USD 793 5.1 848 4.9 293 5.5 2,450 5.5 4,384

– AUD in USD equivalent 13 5.1 13 5.1 273 5.1 – 299

– ZAR in USD equivalent 189 6.3 4 9.8 15 9.8 27 9.8 235

– BRL in USD equivalent 3 8.0 1 7.5 – – 4

– NAD in USD equivalent 10 8.4 10 8.4 4 8.4 – 24


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NTS 36 Financial risk management activities (continued)

The following are the contractual maturities of financial liabilities, including interest payments

Financial liabilities (continued)

Within one yearBetween oneand two years

Between twoand five years

Afterfive years

2011

millionEffectiverate % million



Effectiverate %

Totalmillion

Derivatives – – – 1 1

Financial guarantees (1) 12 – – – 12

Trade and other payables 753 – – – 753

Borrowings 152 928 949 1,625 3,654

– In USD 136 5.2 911 5.1 921 5.5 1,590 5.7 3,558

– ZAR in USD equivalent 4 9.8 4 9.8 14 9.8 35 9.8 57

– BRL in USD equivalent 2 5.4 2 5.3 2 4.6 – 6

– NAD in USD equivalent 10 8.4 11 8.4 12 8.4 – 33

(1) Not included in the statement of financial position.

Credit risk

Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The group minimises credit risk by ensuring that credit risk is spread over a number of counterparties. These counterparties are financial and banking institutions. Counterparty credit limits and exposures are reviewed by the Audit and Corporate Governance Committee. Where possible, management ensures that netting agreements are in place. No set-off is applied to the statement of financial position due to the different maturity profiles of assets and liabilities.

The combined maximum credit risk exposure of the group is as follows:


Other investments 96 95

Other non-current assets 7 6

Trade and other receivables 183 126

Cash restricted for use (note 22) 64 58

Cash and cash equivalents (note 23) 892 1,112

Total financial assets 1,242 1,397

Financial guarantees 12 12

Total 1,254 1,409

In addition, the group has guaranteed the hedging commitments of several subsidiary companies as disclosed in note 35.

Trade and other receivables that are past due but not impaired totalled $84m (2011: $30m). Other receivables that are impaired totalled $1m (2011: $14m) and other investments that are impaired totalled $16m (2011: $21m). No other financial assets are past due but not impaired.

Trade receivables mainly comprise banking institutions purchasing gold bullion. Normal market settlement terms are two working days. No impairment was recognised as the principal receivables continue to be in a sound financial position.

The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of counterparties.




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Fair value of financial instruments

The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. The estimated fair value of the group’s financial instruments as at 31 December are as follows:

Type of instrument

Carryingamount

Fairvalue

Carryingamount

Fairvalue


Financial assets

Other investments (note 18) 167 171 186 180

Other non-current assets 7 7 6 6

Trade and other receivables 183 183 126 126

Cash restricted for use (note 22) 64 64 58 58

Cash and cash equivalents (note 23) 892 892 1,112 1,112


Borrowings (note 26) 3,583 3,730 2,488 2,647

Trade and other payables 949 949 753 752

Derivatives 10 10 93 93

The amounts in the table above do not necessarily agree with the totals in the notes as only financial assets and financial liabilities are shown.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash restricted for use and cash and cash equivalents

The carrying amounts approximate fair value because of the short-term duration of these instruments.

Trade and other receivables and trade and other payables

The fair value of the non-current portion of trade and other receivables and trade and other payables has been calculated using market interest rates.

Investments and other non-current assets

Listed equity investments classified as available-for-sale are carried at fair value while fixed income investments and other non-current assets are carried at amortised cost. The fair value of fixed income investments and other non-current assets has been calculated using market interest rates. The unlisted equity investments are carried at cost or fair value. Unlisted investments for which fair value can be reliably measured are carried at fair value while other unlisted investments for which there is no active market and fair value cannot be reliably measured are carried at cost.

Borrowings

The mandatory convertible bonds are carried at fair value. The convertible and rated bonds are carried at amortised cost and their fair values are their closing market value at the reporting date. The interest rate on the remaining borrowings is reset on a short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value.

Mandatory convertible bonds carried at fair value

In September 2010, the group issued mandatory convertible bonds at a coupon rate of 6% due in September 2013. The conversion of the mandatory convertible bonds into ADSs was subject to shareholder approval, which was granted in October 2010. These bonds are convertible into a variable number of shares ranging from 18,140,000 at a share price equal to or less than $43.50, to 14,511,937 at a share price equal to or greater than $54.375, each as calculated in accordance with the formula set forth in the indenture.


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Fair value of financial instruments (continued)

Mandatory convertible bonds carried at fair value (continued)

The mandatory convertible bonds contain certain embedded derivatives relating to change in control and anti-dilution protection provisions. The shareholders have authorised that the convertible bonds will be settled in equity and do not have any cash settlement potential except if a fundamental change or conversion rate adjustment causes the number of ADSs deliverable upon conversion to exceed the number of shares reserved for such purpose, among other circumstances provided in the indenture, and therefore the group has chosen to recognise the instrument, in its entirety, at fair value. Depending on the final calculated share price on the date of conversion, the liability recognised may differ from the principal amount.

Other convertible bonds that have been issued by the group will only be settled in equity if future events, outside the group’s control, result in equity settlement and thus have a potential cash settlement at maturity that will not exceed the principal amount, in those circumstances the liabilities are recognised at amortised cost.

In determining the fair value liability of the mandatory convertible bonds, the group has measured the effect based on the ex interest NYSE closing price on the reporting date. The ticker code used by the NYSE for the mandatory convertible bonds is AUPRA. The accounting policy of the group is to recognise interest expense separately from the fair value adjustments in the income statement. Interest is recognised on the yield to maturity basis determined at the date of issue, which was 4.55%.

The contractual principal amount of the mandatory convertible bonds is $789m provided the calculated share price of the group is within the range of $43.50 to $54.375. If the calculated share price is below $43.50 the group will recognise a gain on the principal amount; if it is above $54.375, the group will recognise a loss. As at 31 December 2012, the actual share price was $31.37 (2011: $42.45).

The total fair value of the mandatory convertible bonds on 15 September 2010 (date of issue) amounted to $819m. A bond issue discount of $30m was recognised in special items in the income statement. The mandatory convertible bonds were issued by AngloGold Ashanti Holdings Finance plc, a finance company wholly owned by AngloGold Ashanti Limited. AngloGold Ashanti Limited has fully and unconditionally guaranteed the mandatory subordinated convertible bonds issued by AngloGold Ashanti Holdings Finance plc. There are no significant restrictions on the ability of AngloGold Ashanti Limited to obtain funds from its subsidiaries by dividend or loan.

Derivatives

The fair value of derivatives is estimated based on ruling market prices, volatilities, interest rates and credit risk as at 31 December 2012 and includes all derivatives carried in the statement of financial position.

Embedded derivatives and the conversion features of convertible bonds are included as derivatives on the statement of financial position.

The following inputs were used in the valuation of the conversion features of convertible bonds as at 31 December:

2012 2011

Market quoted bond price (percent) 103.9 111.5

Fair value of bonds excluding conversion feature (percent) 102.6 98.9

Fair value of conversion feature (percent) 1.3 12.6

Total issued bond value ($ million) 732.5 732.5

The option component of the convertible bonds is calculated as the difference between the price of the bonds including the option component (bond price) and the price excluding the option component (bond floor price).


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Fair value of financial instruments (continued)

Derivatives (continued)

Derivative assets (liabilities) comprise the following:

Assetsnon-

hedgeaccounted

Liabilitiesnon-

hedgeaccounted


Embedded derivatives – (1)

Option component of convertible bonds – (9)

Total derivatives – (10)


Embedded derivatives – (1)

Option component of convertible bonds – (92)

Total derivatives – (93)

The group uses the following hierarchy for determining and disclosing the fair value of financial instruments:Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table sets out the group’s financial assets and liabilities measured at fair value by level within the fair value hierarchy as at 31 December:

Type of instrument

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total


Assets measured at fair value

Available-for-sale financial assets

Equity securities 69 2 – 71 82 – – 82

Liabilities measured at fair value

Financial liabilities at fair value through profit or loss

Option component of convertible bonds – 9 – 9 – 92 – 92

Embedded derivatives – 1 – 1 – 1 – 1

Mandatory convertible bonds 588 – – 588 760 – – 760


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Sensitivity analysis

Derivatives

The group monitors the sensitivity of the convertible bonds to changes in the AngloGold Ashanti Limited’s share price which is disclosed in the table below.

Change in

underlying factor Change in fair value Change in fair value


Convertible bonds

AngloGold Ashanti Limited share price (US$) Spot(+$5) (14) (23) (2)

AngloGold Ashanti Limited share price (US$) Spot(-$5) 7 21 (2)

(2) Change in share price (+) of spot (+$3) and a change in share price (-) of spot (-$3).

Mandatory convertible bonds

The mandatory convertible bonds valuation is primarily linked to the AngloGold Ashanti Limited share price traded on the NYSE and fluctuates with reference to the NYSE share price and market interest rates. A change of +$5 and -$5 in the AngloGold Ashanti Limited share price will generally impact the fair value of the mandatory convertible bond liability in a stable interest environment by +$72m and -$83m respectively.

Interest rate risk on other financial assets and liabilities (excluding derivatives)

The group also monitors interest rate risk on other financial assets and liabilities.

The following table shows the approximate interest rate sensitivities of other financial assets and liabilities at 31 December 2012 (actual changes in the timing and amount of the following variables may differ from the assumed changes below). As the sensitivity is the same (linear) for both increases and decreases in interest rates only absolute numbers are presented.

Change in interest

rate %

Change in interest

amountin currency

million

Change in interest

amountUS dollars

million

Change in interest

rate %

Change in interest

amountin currency

million

Change in interest

amountUS dollars

million

2012 2011

Financial assets

USD denominated 1.00 6 6 1.00 5 5

ZAR denominated (3) 1.50 3 – 1.50 2 –

BRL denominated 2.50 1 – 2.50 1 1

NAD denominated 1.50 – – 1.50 2 –


AUD denominated 1.00 3 3 1.00 – –

(3) This is the only interest rate risk for the company.


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Sensitivity analysis (continued)

Foreign exchange risk

Foreign exchange risk arises on financial instruments that are denominated in a foreign currency.

The following table discloses the approximate foreign exchange risk sensitivities of borrowings at 31 December 2012 (actual changes in the timing and amount of the following variables may differ from the assumed changes below).

Change in exchange rate

Change in borrowings total

Change in exchange rate

Change in borrowings total

2012 2011

Borrowings

USD denominated (R/$) Spot (+R1) – Spot (+R1) –

ZAR denominated (R/$) Spot (+R1) (22) Spot (+R1) (4)

BRL denominated (BRL/$) Spot (+BRL0.25) – Spot (+BRL0.25) (1)

NAD denominated (N/$) Spot (+NAD1) (2) Spot (+NAD1) (3)

AUD denominated (AUD/$) Spot (+AUD0.05) (13) Spot (+AUD0.05) –

USD denominated (R/$) Spot (-R1) – Spot (-R1) –

ZAR denominated (R/$) Spot (-R1) 28 Spot (-R1) 5

BRL denominated (BRL/$) Spot (-BRL0.25) 1 Spot (-BRL0.25) 1

NAD denominated (N/$) Spot (-NAD1) 3 Spot (-NAD1) 4

AUD denominated (AUD/$) Spot (-AUD0.05) 14 Spot (-AUD0.05) –

The borrowings total in the denominated currency will not be influenced by a movement in its exchange rate.

37 Capital management

The primary objective of managing the group’s capital is to ensure that there is sufficient capital available to support the funding requirements of the group, including capital expenditure, in a way that optimises the cost of capital, maximises shareholders’ returns and ensures that the group remains in a sound financial position.

The group manages and makes adjustments to the capital structure as opportunities arise in the market place, as and when borrowings mature or as and when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof.

During the year the group had no major issuance of equity and utilised borrowings as its primary source of funding.

During December 2011, the group entered into a four-year unsecured syndicated revolving credit facility of A$600m with a group of banks which is currently charged at 200 basis points above BBSY. The interest margin will reduce should the group’s credit rating improve from its current BBB-/Baa3 status and increase should its credit rating worsen. This facility will be used to fund the working capital and development costs associated with the group’s mining operations within Australia without eroding the group’s headroom under its other facilities and exposing the group to foreign exchange gains/losses each quarter. The facility matures in December 2015.

During July 2012, the group completed the following key financing transactions:• a $1bn five-year revolving credit facility with a syndicate of lenders which replaced its existing $1bn syndicated facility maturing

in April 2014. Amounts may be repaid and reborrowed under the facility during its five-year term and the facility bears interest at LIBOR plus 1.5%; and

• an offering of $750m aggregate principal amount, unsecured notes due 2022 at 5.125%. The notes were issued at an issue price of 99.398%. The notes are fully and unconditionally guaranteed by the group.


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37 Capital management (continued)

During October 2012, the JSE granted AngloGold Ashanti Limited the listing of its Senior Unsecured Fixed Rate Notes of R300m, due 14 January 2013, and Senior Unsecured Floating Rate Notes of R700m, due 11 October 2013, under its R10bn Domestic Medium Term Note Programme dated 29 June 2012.

Gearing ratio (Net debt to EBITDA)


Borrowings (note 26) 3,583 2,488

Mandatory convertible bonds (note 26) (1) (588) (760)

Corporate office finance lease (note 26) (31) (33)

Unamortised portion of the convertible and rated bonds 53 85

Cash restricted for use (note 22) (64) (58)

Cash and cash equivalents (note 23) (892) (1,112)

Net debt 2,061 610

EBITDA (2) 2,397 3,014

Gearing ratio (Net debt to EBITDA) 0.86:1 0.20:1

(1) For the purposes of this note, the mandatory convertible bonds are treated as equity and excluded from borrowings in line with the banking agreement.

(2) Refer to Non-GAAP disclosure on page 193.

38 Recent developments

Syndicated bridge loan facility agreement

During February 2013, AngloGold Ashanti Limited entered into a syndicated bridge loan facility agreement pursuant to which a syndicate of banks agreed to make available $750m to AngloGold Ashanti Holdings plc. In the event AngloGold Ashanti Limited chooses to draw on the loan, the proceeds are to be applied towards the repayment of the $733m, 3.5% convertible bonds due in May 2014.


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